In this morning’s data, the Consumer Price Index increased 0.8% in February and 7.9% on an annual basis, as expected but again higher than the previous month. Monthly prices for Fuel Oil, up 7.7%, and Gasoline, up 6.6%, were strong while Electricity prices were weak. Prices for Food at Home also increased 1.4% in the month. The core rate, which excludes prices for food and energy, increased 0.5% in February and 6.4% on an annual basis, also as expected. Meanwhile, Initial Jobless Claims were 227,000 for the week ending March 5th, a bit higher than the previous week but still well below the 300k level considered healthy for the labor market. Overall, inflation remains elevated while the labor market is firm, pushing the Federal Reserve to follow through with policy tightening despite conflict in the Ukraine. The conflict has increased commodity prices and inflation expectations at a time when they were already elevated due to supply chain issues and fiscal support from the pandemic. How central banks respond, such as the European Central Bank’s (ECB) announcing a faster end to their purchase program this morning, will be key in the months ahead. In all, the 10-year U.S. treasury yield ticks higher following the report and equity futures are lower as we head into the market open.
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