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After a tough few weeks, today is a happy day on Wall Street.
The February inflation print gave us a surprising, but welcome boost this morning after prices last month were lower than expected.
The consumer price index showed prices rose 2.8% year-on-year, but still surpassed the federal 2% target, but fell due to the 3% increase recorded in January. Economists had predicted that CPI would be at 2.9% for the 12 months ended in February.
During the month of the month, consumer prices rose 0.2% in February, down from an increase of 0.5% in January. It is under forecast, sought an increase of 0.3% last month. Core CPI (excluding volatile food and energy prices) was 3.1% per year last month, an annual increase of almost four years.
Housing is the main sector that reduces inflation. This has tended to be one of the more stubborn components of printing historically. Relaxing housing costs has contributed significantly to slowing inflation over the past two years.
On the other hand, non-housing expenses have not been consistently relaxed. Core inflation is slowing for now, but the sector contains products that could be affected by tariffs. Food and energy costs are also expected to rise, especially given Trump’s new tariff plans for steel and aluminum. Experts say it will increase OCTG costs by 15% per year.
US stocks gathered in an inflation print Wednesday morning. The S&P 500 earned as much as 0.8%, while Nasdaq composites surged almost 1.5% early in the session. At 2pm on ET, they were trading 0.4% and 0.9% higher, respectively.
Yet fear of an escalating trade war is heavy in the market. Our estimates are “tax trade” currently the dominant factor contributing to US stock prices, even if positive inflation printing provides short-term relief.
So far, the Fed seems comfortable continuing its interest rate cuts moratorium. Powell said last week that the economy is “great.”
“There’s no need to do anything,” he added.
The latest on the Customs Front is a more retaliatory effort against the United States. Canada hit the US with a 25% collection on steel, but the EU has announced additional missions for items such as denim, bourbon and poultry farming.
