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Details in today’s US CPI report are not encouraging

Admin || 13th January 2026

Inside today’s soft core CPI reading MoM, the details are less encouraging, however, pointing to lingering pressures in services, some goods and food.

Core services came in above September levels (the last time we got monthly data), which was widely expected after being underestimated in the shutdown-distorted prints. Beyond the controversial shelter category, services prices cooled slightly to 0.3% but are still running above the Fed’s desired pace.

Also, food prices posted their largest jump since August 2022.

At first glance, core goods pricing was muted, posting virtually zero contribution to December’s 0.3% increase. However, it was mostly dragged by a steep drop in used cars. Apparel declined only slightly from elevated levels while pricing for furnishings rose.

All told, bonds initially rallied in relief that the inflation print wasn’t worse, with CPI fixing anticipating an upside surprise. The core miss reinforced a bond-bullish bias. They’ve whipsawed a bit since and yields are sliding again. The details in the report show a much less benign picture than headline would have you believe. And before taking a victory lap, rate-cut expectations will also have to pass the January CPI test, which has been particularly thorny in recent years.

 

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