Initial thoughts on Jan CPI

1. details seem worse than superficial CPI prints. service mom +0.7%, shelter mom +0.6% high enough to trigger “restrictive monetary policy” fear.

2. already at the 4 cuts this year. possibly 15bp more increase from this level.

3. stretched credit spread (too tight) would be able to avert. historically too low spread + highly uncertain rate path → inspire selling pressures.

4. Tho I think Jan CPI is a temporal phenomenon, not to the reflation regime. (January Effect, history shows bumpy road back to 2% range..) Still you should acknowledge that the price always follows the most recent rhetorics.

5. will enter UST 2YR long position @ 4.75%, and start to sell KPs if spread widens +5bp today