Low Rates Only Temporary?

With a strong CPI reading y'day. The FOMC called inflation "disappointing," and thoughts are of raising rates, possibly at a "rapid" pace once the economy recovers.

Overnight News Bullets

• UK Public Finances (JAN) out at -22.1B vs. -19.5B expected vs. 17.0B prior read.

• UK Public Sector Net Borrowing (JAN) out at -14.1B vs. -9.5B expected vs. 7.8B prior read (revised lower to 6.9B)

• UK M4 Money Supply MoM/YoY (JAN) out at 1.3%/12.9% vs. 0.8%/12.0% expected vs. 1.5%/12.3% prior read (revised higher to 1.6%/12.4%)

• UK M4 Sterling Lending (JAN) out at 21.6B vs. 16.0B expected vs. 17.4B prior read (revised higher 18.5B)

• US MBA Mortgage Applications (FEB) out at -22.6% vs. -2.1% prior read.

• US Consumer Price Index MoM/YoY (JAN) out at 0.4%/4.3% vs. 0.3%/4.2% expected vs. 0.3%/4.1% prior read (revised higher 0.4%)

• CA International Securities Transactions (DEC) out at C$1.241 vs. C$1.500 expected vs. –C$4.840 prior read (revised lower to –C$4.898)

• US CPI Ex. Food and Energy MoM/YoY (JAN) out at 0.3%/2.5% vs. 0.2%/2.4% expected vs. 0.2%/2.4% prior read

• US CPI Core Index (JAN) out at 213.765 vs. 213.148 prior read (revised lower to 213.103)

• US Consumer Price Index (JAN) out at 211.080 vs. 210.900 expected vs. 210.036 prior read.

• US Housing Starts (JAN) out at 1012K vs. 1010K expected vs. 1006K prior read (revised lower to 1004K)

• US Building Permits (JAN) out at 1048K vs. 1050K expected vs. 1068K prior read (revised higher to 1080K)

• US FOMC Minutes •JN Trade Balance Total (JAN) out at –JPY79.3bln. Vs. JPY8.2 expected vs. JPY877.9B prior read.

• JN Adjusted Trade Balance (JAN) out at JPY861.9B vs. JPY900.0B expectd vs. JPY642.5B.

Markets

• FX: USD initially higher on CPI but sold off after FOMC minutes – resistance in EURUSD coming in at 1.4760. CHF loosing strength on credit worries.

• Stocks: Europe down across the board, US reversed higher after FOMC closing in on first resistance at 1370. Asian indices enjoying positive momentum on solid earnings. Nikkei up 2.8%.

• Fixed Income: US 10yrs continue lower, testing the 50 day MA, Bunds congesting but with a bearish bias. JGB’s selling massively off on risk willingness.

• Commodities: WTI Crude not able to close above $100 yet, but a draw in today’s DOE inventories could be the trigger. Precious metals continue higher – silver testing $18.