Mixed US data, including steady inflation and firm spending, supports a January Fed hold
Mixed data say Fed hold
None of the main data releases this week offered big surprises. Inflation came largely in line with expectations as headline CPI printed 2.7% (YoY) and core printed a high 2.6% (YoY). Both are good enough to prevent the resurgence of acute worries over the trajectory of inflation into year‑end.
If there was a surprise, it came from the manufacturing sector, as both the Empire and the Philadelphia Fed manufacturing surveys printed much better than expected, with good details on new orders and encouraging details on prices. In conjunction with improving factory orders, this hints at an improvement in the manufacturing sector. But this will need to be sustained for some months to really turn into a visible lift given the prolonged period of sluggishness we have experienced.
The housing data sent mixed signals. On one hand, existing home sales rose just over 5.0% (MoM) in December to the highest level since early 2023, suggesting that lower interest rates are finally helping to unfreeze this segment of the market. On the other hand, though, homebuilder sentiment unexpectedly declined in January, marking the first retreat since August. The tug of war between pent‑up demand and stretched affordability in the housing sector will likely continue throughout 2026.
