Benign inflation; now, what about growth?

Daily update

Yesterday’s US consumer price inflation data was benign. Consumer durable goods prices fell for a majority of the Biden administration. Although consumers do not focus on such prices when considering inflation, this deflation did boost consumer spending power. The abrupt market response reflects the problem with Federal Reserve Chair Powell’s “data dependency” mantra: any data release (however dodgy) prompts an extreme market response.
US retail sales data is due today , only partly capturing US consumers’ spending on fun. Rising real incomes mean consumers have more spending power, and if a US consumer has spare cash at the end of the month there is an almost constitutional obligation to spend it. The Fed’s Beige Book of economic anecdote suggested stronger-than-expected spending into year-end.
UK monthly GDP is too volatile to interest financial markets, but the pattern of growth is not necessarily consistent with the doom-laden narrative from companies sulking after being asked to pay more tax. German final December consumer price inflation was unexciting.
US Treasury Secretary-nominee Bessent’s confirmation hearings are today. They will likely sound reassuring on trade taxes, but the bigger question is whether Bessent matters on trade tax policy (or any policy). A single social media post could change market expectations.