Core Insights - Traders are anticipating that the Federal Reserve may cut interest rates more than twice this year due to a surprising inflation report, leading to gains in the Treasury market [1] - The Consumer Price Index (CPI) rose by only 0.2% in January, the smallest increase since July, alleviating some concerns among Fed policymakers regarding high inflation [2][3] - Economists from Bloomberg expect disinflationary pressures to dominate in the coming months, predicting a total rate cut of 100 basis points this year [3] Inflation Data - Overall inflation unexpectedly decreased to 2.4% in January from 2.7% year-over-year, while core inflation, excluding food and energy prices, fell to 2.5% from 2.6% [9] - The January CPI report is seen as encouraging, with indications that tariff-induced price hikes may be nearing their end [4] Federal Reserve Actions - The Federal Open Market Committee (FOMC) voted 10-2 to maintain interest rates at 3.50% to 3.75% in January, marking the first pause since July 2025 after three consecutive cuts [6][7] - Some Fed Governors expressed dissent, advocating for a 25 basis-point cut due to signs of a softening labor market [7]