Here a Creep, There a Creep

Another day with another data release. This time the US CPI is coming in a little hotter than anticipated. Calls were for CPI to increase .2% in January, but they came in +.3%. The annual rate of inflation moved to 3.1%. Inflation starting with a 3 handle is a lot bigger than inflation starting with a 2 handle. 

As expected US yields are starting to creep up a bit, and will likely continue to move bit by bit as US numbers come in hotter than anticipated over the coming weeks – just as they have over the past 6 weeks. It seems we are getting slightly better numbers on a very regular basis, and this will lead to those yields creeping.

Of course, Canada and the US seem to be attached at the hip even more than normal as of late, so any creep up in the US yields and numbers will probably translate over to the North. For those expecting rate cuts in the next month or so, you may want to re evaluate your position on that.

It looks like higher than wanted inflationary pressures are going to linger around a while longer than expected, and that will push rate cut expectations back by a month, or two, or maybe 3. If we get into the May/June period with there higher inflation readings, then we could be September before rates start to come down. 

Of course these yields will start to translate into higher fixed rates as well. Bit by bit they will creep up, bit by bit we will see the promos, the specials, and the extra comp disappear off the rate sheets. Bit by bit, rates will trend higher. All of this courtesy of the red, white and blue…