Mixed US inflation data last week

Last week, US stocks bounced back strongly from the previous week’s decline, although Small-Caps underperformed again. European and UK stocks put in a much more muted performance.

US consumer inflation data came in higher than expected last week. CPI for December came in at 3.35%, up from 3.14% in November (a 5-month low), and above forecasts of 3.2%. Following the data there were comments from Fed members suggesting that it is too soon to think about cutting rates – even so, the market is pricing in a 70% chance that the Fed will cut in March (this was previously 90%).

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