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    Inflation Rises in January – Fed on Path of Higher Interest Rates, Stocks Fall on Rate Fears


    On Tuesday, the latest reading of the consumer price index (CPI), which tracks price changes for a range of goods and services, came in higher than expected and showed that inflation rose by 0.5% in January.[0] The Consumer Price Index (CPI) has risen by 6.[1] Taking a closer look at the January CPI numbers, the headline inflation rose 6.4% year-over-year, down from December's 6.5%, marking the seventh straight monthly decline for the consumer price index after it peaked at 9.1% in June.[2] Core CPI, which excludes volatile food and energy prices, was up 0.4% on a monthly basis, faster than the 0.3% monthly increase seen in December.[3] This signaled that the disinflationary process is slowing, although the process of inflation-abating is still in play in the U.S.[4]

    The news on inflation is likely to keep the Federal Reserve on a path of higher interest rates, as officials echoed the need for further interest-rate increases to help tame inflation.[5] Treasury yields rose Tuesday, with the rate on the two-year note climbing as much as 12 basis points to nearly 4.64%, the highest since November and within 20 basis points of last year’s multiyear high.[6] The Federal Open Market Committee's upcoming meeting in March is almost sure to result in a 0.25% rate increase, and economists anticipate that another rise is probable in May.[7]

    Meanwhile, stocks were falling after retail sales fuel rate fears.[8] The Dow Jones Industrial Average (DJIA) fell 0.5%, more than any closing loss since Feb. 9.[9] At 11:03 Eastern Time (16:03 Greenwich Mean Time), the Dow Jones Industrial Average had decreased by 158 points, or 0.5%, while the S&P 500 and the NASDAQ Composite dropped by 0.5% and 0.3%, respectively.[10] The futures associated with the Dow Jones Industrial Average decreased by 25 points, representing a 0.07% decline.[8] Meanwhile, S&P 500 futures dropped marginally, and Nasdaq-100 futures declined 0.12%.[11] The yield on 10-year Treasury bonds increased by 4 basis points to 3.76%.[9] The 6-month Treasury bill rate has risen to 5.02%, surpassing the 5% mark for the first time in over a decade.[11] The yield on the one-year Treasury bond has risen to 4.[11]

    0. “Consumer prices rose 6.4% in January” Fox Business, 14 Feb. 2023,

    1. “January 2023 inflation report shows a rocky journey to recovery” Grid, 14 Feb. 2023,

    2. “Stock Market Today: Stocks Struggle for Direction After Inflation Data” Kiplinger's Personal Finance, 14 Feb. 2023,

    3. “Annual Services Inflation Rages at New Four-Decade High, Monthly Overall CPI Hottest since June” WOLF STREET, 14 Feb. 2023,

    4. “US inflation stays high as housing costs bite” BBC, 14 Feb. 2023,

    5. “Nasdaq, S&P, Dow mixed as January retail sales jump by the most in almost two years” Seeking Alpha, 15 Feb. 2023,

    6. “Stock market news today: Stocks fall after strong retail sales data” Yahoo News, 15 Feb. 2023,

    7. “Consumers May Face ‘Reckoning' As Inflation's Descent Slows” Investopedia, 14 Feb. 2023,

    8. “Bill Smead: U.S. inflation is ‘far stickier' and could last a decade” CNBC, 14 Feb. 2023,

    9. “Stocks Fall as Consumer Spending Just Won’t Quit: Markets Wrap” Yahoo Finance, 15 Feb. 2023,

    10. “U.S. stocks are falling after retail sales fuel rate fears By”, 15 Feb. 2023,

    11. “Futures Fall After Market Shrugs Off Inflation; Hot Stock Crashes” Investor's Business Daily, 15 Feb. 2023,

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