US inflation slows faster, but still a bit to go
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Why did the US inflation print come in cooler than expected and what does it mean for markets?
A cooler than expected inflation print from the United States. That's a good thing, right? But will it last? There's been quite a reaction in the bond markets while equity markets still concerned about AI and the Bank of England clearly as divided as ever. This week, well, it's a very quiet start to the week with Asia and the US out of action today. But the RBNZ this week and Japan's GDP today. It's Monday, it's the 16th of February 2026. It's the morning Call from Nap. Good morning. Well, noticeable falls in bond yields on Friday, down five basis points for ten year treasuries, down to four point oh five percent. That's thirteen or fourteen points below where it was earlier this month. Two year yields got down to three point four percent, the lowest they've been for three and a half years.
UK yields fell four basis points on Friday. Aussie ten years uh are four point seven one percent now, down six basis points on Friday. The US dollar is just below. On the DXY after a relatively flat week, the Aussie dollar has fallen away from its recent high of 71.5 US cents. Now it's down to 70.7 cents. Tech stocks continue to fall in the US on Friday, the Nasdaq down a quarter percent, tech generally down half a percent, a small rise in the S P. But if you look over the week, relatively flat on Friday, the FTSE 100 and Eurostocks 50 both grows 0.4%. percent, but a one point four percent fall in the ASX 200 on Friday. And oil is a little higher, a third of one percent for Brent. Uh also big rises in gold and silver, again, gold back over the five thousand dollar mark.
And here's NABS Ken Crompton. So in Sydney, this uh the this global move down in yields, uh particularly in uh two-year yields in the United States, uh presumably that's all down to the uh the US inflation.
Yeah, my dear Phil, there has been a extension of the bond rally into the end of the week. Uh ten year two year treasury yields three point four one percent now, which is actually the lowest they've been since about uh mid twenty twenty two when we're in into the relatively early stages of the of the easing cycle. So yeah, we haven't actually seen expectations for the Fed's pricing uh for sorry, for Fed changes in the near term moving too much. Uh we've still got the first hike is not priced until sorry, festival cut is not priced until July, but um but the market is becoming a bit more comfortable with that sort of slightly more medium term inflation outlook evidently as we can see in that move.
How did the surprise inflation number affect US Treasury yields and global bond markets?
So hence why yeah two year treasury's down at that level and the ten year back down at um uh about four point oh five percent once again that that's the lowest in in a couple of months as well.
Right. Uh and because the headline number for inflation was naught two percent month on month for January, not point three percent was expected. So that brings the headline year on year rate down to two point four percent, which is quite a fall from two point seven percent in December. So yeah, a a faster move down. Yeah, and the core
measure sort of matched consensus so we that was at zero point three per cent but you know looking into the looking into the detail there's plenty of ways to to cut and spin that I mean most of which pointed to you know sort of a a relatively dovish take on the on the number that will let the Fed be able will that will sort of lock in the ability for the Fed to ease later this year. I mean I guess some of the other analysis that I'm seeing there does caution that there is actually a relatively broad basis to the inflationary pressures that are left there. And of course, you know, don't forget the don't forget the levels we're we're talking about here. I mean we will get an update on the core PCE uh for December on Friday, that which is the measure that the Fed looks at.
Uh and that is that that's all sort of running in in the high two percentage point area. And the people that updated their January PCE forecasts off the back of uh this P CPI number on on Friday night. Um uh still looking at that to maintain at um around sort of to two point six, two point nine percent measure to next year.
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Chapters
6 chapters
1
Why did the US inflation print come in cooler than expected and what does it mean for markets?
0:01–2:24
2
How did the surprise inflation number affect US Treasury yields and global bond markets?
2:24–5:41
3
What is the Fed’s “waiting game” and when might the first rate hike be priced in?
5:41–8:26
4
How are US tariffs being absorbed and what impact could they have on future inflation?
8:26–10:34
5
Will the Supreme Court’s decision on Trump’s emergency‑powers tariffs change the inflation outlook?
10:34–13:13
6
Why is the Bank of England split on rate hikes and what does the internal vote reveal?
13:13–14:26