Daily Market Color February 13, 2023Yields Mixed, Equities Higher on Eve of CPI Rates mixed ahead of CPI. Treasury yields were mixed across a flattening curve, the 2-year yield remaining at 4.52% while the 10-year fell ~3bps to 3.70%. The move comes ahead of a key CPI release tomorrow, where markets are hoping for a miss that will offset the recent “higher for longer” sentiment. Fed voter Michelle Bowman continued to beat the drum today, saying that “we are still far from achieving price stability, and I expect that it will be necessary to further tighten monetary policy to bring inflation down toward our goal.” Elsewhere, equities rallied on the day, with the S&P 500 up 1.15% while NASDAQ increased 1.48%. Hot January CPI expected, but Fed Survey offers positive signs. Several recent data releases point to a stubborn CPI figure tomorrow. An uptick in used car prices, updated weightings to better account for single-family rent, and higher energy prices due to a cold spell may all contribute to a higher print. That said, even if tomorrow’s inflation figure is unexpectedly high, a recent Fed survey showed Americans have reduced their 1-year expectations for wage growth from 4.6% to 3.3%, the largest one-month drop in the 10-year history of the data series. Day ahead. CPI will be the focus, with some Fed members set to make public comments afterwards. Inflation is expected to ease for the 7th consecutive month, down to 6.2% from 6.5% in December after peaking at 9.1% in June. Central Bank voters Lorie Logan (neutral) and John Williams (hawk) will speak at 11 AM and 2:05 PM, respectively.