US INFLATION ON WEDNESDAY TO SET THE TONE FOR MACRO TRENDS

Equity markets continued convulsing this week while Treasury yields furthered their ascent, and next week brings a key piece of inflation data out of the US that could help or hasten this recent theme of worry. On Wednesday morning, CPI for the month of January is released and this will be the first look that we get at inflation data out of the US since last week’s Average Hourly Earnings as part of Non-Farm Payrolls. Also of interest on the inflation front and being delivered in a rather timely manner after the Bank of England’s hawkish twist yesterday will be the most recent print for UK inflation. Given the turn from Carney and Co. at yesterday’s Super Thursday event, this number will likely be highly watched-for in determining just how hawkish the BoE might be as we move deeper into the year.

ECONOMIC CALENDAR, HIGH-IMPACT EVENTS FOR WEEK OF FEBRUARY 12TH

DailyFX Economic Calendar High-Impact Events, Week of February 12th, 2018

US INFLATION CAN CARRY BROAD CONSEQUENCES

In last week’s NFP report, included was the strongest wage growth seen since 2009. This drove a theme that had already started to show with higher yields in US treasuries, which was driven in part by the fear the Fed will have to hurriedly hike rates to try to stem price growth as inflation continues to show a bit more prominently than what we’ve seen in years past.

The Fed’s inflation target is 2%, and on Wednesday, we’re expecting to see an annualized print of 2.1%, with the expectation for core inflation to print at 1.8%. So while this is hardly the UK’s 3%+ inflation that’s been showing of recent, we’re still far elevated from where the US economy has been since the Global Financial Collapse. Markets are already expecting a rate hike in March, but if we do see continued build around inflation, particularly after the next rate hike, then we’re likely looking at more for the rest of the year, and this seems to be one of the primary complications around equity markets at the moment.

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