US CPI Fuels Fed Wagers, US Inflation Comes In Cooler Than Expected | Real Yield 2/13/2025

U.S. inflation cooled more than expected in February 2026, with CPI data showing a slower-than-forecast rise, easing pressure on the Federal Reserve to maintain aggressive rate hikes. Financial strategists, including Kathy Jones of Schwab and JPMorgan’s Alexander Wolf, debated the implications, suggesting the data could prompt the Fed to pause or slow tightening cycles sooner than anticipated. Fixed-income experts like TCW’s Jerry Cudzil highlighted potential bond market shifts, noting lower yields could follow if inflation continues trending downward, benefiting long-duration assets. Invesco’s Matt Brill emphasized investment-grade credit resilience, arguing cooler inflation may reduce corporate borrowing costs, supporting credit markets amid economic uncertainty. Markets reacted swiftly, with traders adjusting Fed rate cut bets, reflecting growing confidence in a softer monetary policy stance if inflation remains subdued.