Did the US CPI start a new bull market? What do I think?

So what exactly happened in US CPI report? Did the US CPI start a new bull market or are we going to see another leg down?

US CPI for the month of January came in hotter than expected at 6.4% Y/Y.

A poll conducted by Reuters suggested the CPI to come in at 6.2%, down from 6.5% in December. While the 6.4% number was not within the expectation of analysts, I believe that the number is still a step in the right direction. Inflation has still been steadily coming down from its peak in June 2022 at 9.1%, to 6.4% in January 2023.

Fed Fund Futures, an instrument traders use to speculate on the trajectory of future Fed rate hikes remain largely unchanged. The Fed Rate Monitor tool by investing.com is a good way to check on the trajectory of future Fed rate hikes

Monetary policy peak is expected to be at the mid of this year, at 5%-5.25% Fed Funds Rate. Previously, before the CPI report, two more 25bps rate hikes were priced in with a 37.6% chance of a third 25bps rate hike. After the CPI report, the 37.6% probability for the third rate hike increased to 46.5%.

In my opinion, I think it is very hard to predict whether the 3rd rate hike happens or not and it might not be as important as one thinks it is. The most important metric is in fact studying incoming data to know that inflation is indeed coming down and the Fed is nearing the end of its hiking cycle.

The question of whether the Federal Reserve will raise interest rates two or three more times has created a potential for short-term volatility in market prices. Nonetheless, as an investor who values fundamental analysis, I view periods of uncertainty and market turbulence as prime opportunities to expand my portfolio at reduced costs. Within this context, Perion Networks, a company that I have previously written about, presents itself as a compelling option.

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