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    US CPI (non-seasonally adjusted) came in at 325.25 in January, below the 325.41 forecast

    by VT Markets
    /
    Feb 13, 2026
    The United States Consumer Price Index (CPI), not seasonally adjusted, rose to 325.25 in January on a month-on-month basis. This was below the expected level of 325.41. Because January’s inflation data came in cooler than expected, we expect markets to adjust their view of Federal Reserve policy. Softer price pressure increases the odds of an earlier interest rate cut. Markets are already pricing this in: Fed funds futures now show a 70% chance of a rate cut by the June 2026 meeting, up from 50% yesterday. For equity index traders, this points to lower market volatility in the weeks ahead. The CBOE Volatility Index (VIX) has already dropped below 14 on the news, and it may fall further toward 12. Selling premium with strategies like iron condors or cash-secured puts on the SPX could benefit from both time decay and a further drop in implied volatility. This setup is similar to the second half of 2025, when softer inflation reports often led to rallies that lasted for weeks, especially in growth sectors. In that period, each downside CPI surprise triggered a strong rally in the Nasdaq 100. If yields keep falling, technology and other long-duration assets may outperform. Rate traders should watch the U.S. 2-year Treasury yield for the fastest reaction. It will likely move lower from its recent 4.1% area. That would signal the market is bringing forward its expected timeline for monetary easing. Futures tied to short-term rates should rise in this environment. Next, attention will turn to the upcoming employment report. If the labor market shows weakness along with cooling inflation, the case for a rate cut as early as the May meeting will strengthen. Any positions taken now should be reviewed after that key data release.

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