Big Inflation Print and How The Fed Missed Its Soft Landing

The Federal Reserve had hoped to land inflation at its 2.00% target rate—inflation indicators just pushed back above 3.00%—it's a missed landing!

The core CPI indicator just printed a hot 0.570% month-over-month increase for January. The annual core CPI rate crossed into 3.286% on a year-over-year basis. Interest rates spiked upward on the news, and stocks fell—albeit, they are fighting back.

I have been saying since the fall of 2023, that the economy was too robust for the Federal Reserve to lower interest rates in 2024. Simultaneously, with the 2024 presidential election, the Fed had zero business moving interest rates. They did anyway. Today’s print above the 3.000% level reiterates that the Fed missed by lowering rates too early: there will be a price to pay for this.

At the same time, we now have an enormous balancing act to contend with regarding tariffs & tax cuts. This will take a steady hand to reign in price increases while balancing economic output and employment.

For now, my TLT ETF strategy has paid off once again by going long TBT ETF ahead of the CPI data, then buying TLT with the profits.