CPI breaks the chart》The 10-year U.S. Treasury bond yield soared to 4.66%, the largest increase this year. Will the Fed only cut interest rates once this year?

The U.S. Bureau of Labor Statistics (BLS) released data last night showing that the Consumer Price Index (CPI) rose 3% year-on-year in January, higher than the market expectation and the previous value of 2.9%. The monthly CPI increase in January was 0.5%, also higher than the market expectation of 0.3% and the previous value of 0.4%. The core CPI favored by the Federal Reserve: - Rose 3.3% year-on-year in January, higher than the market expectation of 3.1% and the previous value of 3.2% - Increased 0.4% month-on-month, slightly higher than the market expectation of 0.3% and far exceeding the previous value of 0.2%, marking the largest increase since March of last year. This highlights the resurgence of inflationary pressures and has led the market to significantly delay its forecast for the Federal Reserve to cut interest rates this year. At the same time, Federal Reserve Chairman Powell also reiterated during a hearing at the House Financial Services Committee last night that he is in no rush to further cut interest rates. U.S. Treasury Yields Surge, Fed Rate Cut Delayed to Year-End Bloomberg reports that following the higher-than-expected core CPI data, U.S. Treasury traders have pushed back their expectation for the next rate cut from September to December, with the interest rate market now reflecting only one 25-basis-point rate cut for the rest of this year. After the release of the inflation data, U.S. Treasuries plunged, with yields across the board rising at least 8 basis points, with the benchmark 10-year Treasury yield briefly rising 12 basis points to 4.66%, marking the largest single-day gain this year. The yield on the more rate-sensitive 2-year Treasury note briefly rose 10 basis points to 4.38% before retreating to around 4.36%. Fitch Ratings' chief economist Brian Coulton said:

The current situation is almost a replay of the first half of 2024, when unexpected upward pressure on inflation caught everyone, including the Federal Reserve, off guard. This again underscores that the Federal Reserve has not yet fully completed its task of suppressing inflation, and new inflationary risks, such as tariff hikes and constrained labor supply growth, are beginning to emerge.

No More Rate Cuts This Year? Peter Cardillo, chief market economist at Spartan Capital Securities, analyzed that the latest data proves that inflation remains a problem, supporting the Federal Reserve's cautious stance on rate cuts. The prospect of tariffs has also heightened concerns about inflation, and with the strong U.S. dollar and rising yields, precious metals are facing pressure, while the stock market is essentially in decline. Cardillo believes that if this inflationary situation persists for another one or two months, the Federal Reserve may keep rates unchanged for the rest of the year. Powell has clearly stated that the Federal Reserve will adhere to its dual mandate and will not be bullied by any politician. While Trump may pressure the Federal Reserve to cut rates, the Federal Reserve will not give in.