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    U.S. monthly Consumer Price Index rose 0.2% in January, below the 0.3% forecast, report says

    by VT Markets
    /
    Feb 13, 2026
    The U.S. Consumer Price Index (CPI) rose 0.2% month over month in January. This was below the expected 0.3%. The data shows inflation is rising more slowly than forecast. The report compares the actual monthly change in prices with what the market expected.

    Rising Rate Cut Expectations

    Because January inflation was cooler than expected, the odds of a Federal Reserve rate cut have risen sharply. Market pricing in the CME FedWatch tool now shows a 75% chance of a rate cut by the March meeting, up from 40% last week. This suggests the disinflation trend may be returning after a stretch of stubborn price pressures. We should consider increasing exposure to long-dated call options on rate-sensitive growth assets, especially technology. Looking back at 2025, high interest rates weighed on tech valuations for much of the year. This new inflation print could be a catalyst for further gains in indices like the Nasdaq 100, which has already risen more than 3% this week. This backdrop is also supportive for fixed income, which makes long positions in Treasury futures more appealing. The 10-year Treasury yield has already fallen below the key 3.8% level after the release. We expect yields could keep drifting lower, which would support bond prices. Implied volatility may decline as the Fed’s path becomes clearer, which can make selling premium more attractive. The VIX is already below 15, a big change from much of 2025, when inflation uncertainty drove higher volatility. Strategies such as selling puts or using iron condors on major indices could perform well in this setting.

    Dollar Weakness Outlook

    A more dovish Fed would likely weaken the U.S. dollar versus other major currencies. As U.S. rates fall relative to overseas rates, the interest-rate advantage that supported the dollar may shrink. This view can be expressed by shorting U.S. dollar index futures or buying put options on dollar-tracking ETFs. Create your live VT Markets account and start trading now.

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