As we mentioned last week, slowing inflation is one of the pillars of the current narrative that should enable the Fed to lower its key rates, ideally as early as next March. The release of a slightly higher-than-expected consumer price index could, however, thwart this fine mechanism. In December, the CPI came in at +3.4% year-on-year against a forecast of +3.2%, while the "Core" version (excluding energy and food) stood at +3.9% against a forecast of +3.8%.

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After an initial reaction that was negative to say the least, stock market indices managed to recover, particularly during the US session, while the yield on the US 10-year bond held below the technical threshold of 4.07%. We should bear in mind that breaching this resistance will confirm the end of the downward momentum in place since last October, and at the same time confirm our central scenario of an intermediate rebound in the first quarter.

In the meantime, investors seem intent on focusing on the results season that has just begun, to ensure that the soft-landing scenario - another pillar of the current narrative - still holds firm.