After two weeks into the new year, the market is responding well to inflation reports and expectations. Thanks to the retreat of Energy prices and to a lesser extent of food items, inflation has come down. The services component, however, continues to grow strong. And that’s why Core inflation is not retreating as much as the headline number. Energy can be a very volatile component, and it can spike due to supply issues (OPEC) as well as demand issues (China reopening, etc). Inflation control is still work in progress, and we’ll get more information on the collateral effects of this restrictive monetary policy when #gdp and employment data is published.
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