Episode summary
US Inflation Comes in Relatively Tame, Defying Fears of Jump
Bloomberg Surveillance
· · Guests: Veronica Clark, Michael Ball
Summary
The discussion centered on a January CPI print that looked milder than many had feared, with the speakers emphasizing that there was little sign of broad tariff pass-through or a January price reset. They pointed to stable core goods, softer auto insurance, and a large drag from shelter, while noting that some services categories such as hospital services remained sticky. The host framed the report as a relief for the Fed and markets, with traders marking up the odds of rate cuts this year.
Key takeaways
- The host said the CPI report showed no broad tariff pass-through and no big January price reset in apparel or home furniture.
- Michael Ball argued that shelter and auto insurance helped pull the overall inflation reading lower, while hospital services remained a sticky exception.
- Veronica Clark said the January labor and inflation data should not be overread because seasonal patterns often make both reports look stronger than they really are.
- Clark said the Fed is still likely on hold for now, but expects cuts later this year and possibly more by summer if labor data weaken again.
- Ball argued that manufacturing weakness predates tariffs and that the sector is more exposed to restrictive rates than to a single month of inflation data.
Notable quotes
“we're not seeing a whole lot of one tariff pass through, which there was this concern that, you know, after we'd sort of seen the dust settle”
“Looking at apparel, I'm looking at home furniture. Some of these things that we know would be in the here they are not moving higher”
“I think it's coming from hospital services there. I see that is sticking out a little bit in”
“Markets are pricing in a half a cut. So we're at two and a half cuts for the year now on this”
“there's really nothing to change. Chair Powell's view”
How the episode opens
No, I mean, I've taken a look. It looks nice compared to what we were expecting. Obviously, we all know January can often be a shock from prices resetting just normally.
And and there's obviously the seasonality factors. And taking that aside, we're not seeing a whole lot of one tariff pass through, which there was this concern that, you know, after we'd sort of seen the dust settle, you know, businesses would use January or the New Year to basically reset higher. Looking at apparel, I'm looking at home furniture.
Some of these things that we know would be in the here they are not moving higher. Auto insurance is down. That's good obviously shelter big lower hit there which is going to drag the whole thing down, which is very positive.
And finally, I think it's coming from hospital services there. I see that is sticking out a little bit in. And look, that is not cyclical.
Yep. If you're the Fed, I mean, pretty darn good week for you, right? I mean, if if you the administration, a good week, you feel like things are working in the right way.
But if you're the Fed with a dual mandate here, I'm pretty good shape here. Markets are pricing in a half a cut. So we're at two and a half cuts for the year now on this.
Two and a half cuts, Yeah. Okay. So what do you think?
What are the variables going forward, do you think, for this? Again, I think we have to watch these labor revisions as well. Yeah, the worry is that one, the actual labor for January was not very cyclical.
It was all sort of structural again with what we're seeing in the CPI. So there is a structural story about the aging demographics of this nation and that itself is not something the Fed can really target, but it is going to be a drag on overall growth.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- us inflation
- cpi print
- fed rate cuts
- treasury yields
- tariff-related price pressure
Companies and tickers mentioned
- C
- WFC
- Citigroup
- Wells Fargo & Co.
Watch the episode
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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