January's inflation has put a bit of a stop to the overly-enthusiastic investors, who were already taking the fight against inflation as a done deal. However, we had expected January's figures to be slightly worse thanks to the very fact that many items are overvalued during January.
On the positive side, we can at least look at the longer-term trend in US headline inflation. This can be seen in the chart below. Since June, a clear downward trend can be noticed, which is causing increased risk appetite, especially among retail investors. However, their more professional peers are still cautious. From February onwards, inflation should already be falling at a faster pace and be somewhere around 3% by the end of the year in the U.S. However, interest rate settings will be key for the markets.