11.03.26 - Inflation data - a side note
Today’s US inflation data came broadly in line with expectations, but it had only a limited impact on markets. The February CPI report showed that inflation pressures remain present while the market’s main focus continues to lie elsewhere: geopolitics and energy prices.
The US Consumer Price Index rose 0.3% month-over-month in February, slightly accelerating from the 0.2% increase in January and matching market expectations. On an annual basis, inflation held steady at 2.4%, unchanged from the previous month and remaining at the lowest level since May 2025.
Markets: rebound stalled
Equities: broadly lower
Bonds: yields moved higher again driven by the renewed rise in oil prices. The US 10-year Treasury yield climbed back to around 4.23%
Currencies: The US dollar strengthened, reflecting rising yields and renewed uncertainty
Commodities: Energy markets remain the dominant driver. WTI crude oil climbed back to around USD 88 per barrel, while precious metals eased slightly after their yesterday’s rally.
Cryptos: short rally lost momentum - Bitcoin stabilizing at USD 70k
Volatility: The VIX remains elevated around 24
My View: Today’s inflation data is largely a side note.
While the February CPI reading remains above the Federal Reserve’s 2% inflation target, it reflects past price developments rather than the forward-looking inflation risks now emerging.
The key variable for markets has become energy supply and oil prices.
If the disruption of oil flows persists – particularly due to the closure of the Strait of Hormuz – energy prices are likely to remain elevated and could move significantly higher. This would inevitably feed into higher future inflation expectations.
At this stage, the trajectory of markets depends primarily on how the geopolitical conflict evolves and whether global energy supply disruptions continue.
An immediate resolution would likely calm markets quickly. However, based on the current dynamics, a rapid solution appears unlikely.
For now, markets will remain highly sensitive to developments around the conflict and oil supply, while macroeconomic data and corporate fundamentals are likely to play only a secondary role.
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