The U.S. consumer price index increased in December as “shelter” costs and vehicle prices of both new and used vehicles increased. Consumer price index (CPI) figures released by the Bureau of Labor Statistics indicated consumer prices rose by 0.1% in December, in line with market expectations of 0.1% but lower than November’s comparable figure of 0.4%. On a 12-month basis the consumer inflation rate eased back from November’s reading of 2.2% to 2.1%.
U.S. financial markets reacted by sending bond yields higher but the USD lower. 2 year bond yields increased by 4bps to 2.00% but yields at the long end were less affected and 10 year yields increased by just 1bp to 2.55%. The U.S. dollar was weaker against all other major currencies.
