US: Markets likely to look through CPI data – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad notes that US February CPI is due, with headline and core expected to remain at 2.4% and 2.5% year-on-year, while super core services stays stuck at 2.7%. BBH argues markets will likely look past this release, as rising gasoline prices may push inflation higher and complicate the Federal Reserve’s easing path, increasing stagflation risks.

Gasoline-driven inflation risks and Fed path

"US February CPI is up next (12:30pm London, 8:30am New York). Headline and core CPI are expected to remain at 2.4% y/y and 2.5% y/y, respectively, for a second straight month."

"Watch-out for super core services CPI (less housing), a good indicator of underlying inflation trends, which has been stuck at 2.7% y/y since November."

"Regardless, markets will look past the February CPI figures given the recent surge in gasoline prices could lift inflation sharply in coming months."

"Persistent energy price pressure could complicate the Fed’s easing path and heighten stagflation risks as US labor demand is weak."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)