Yesterday, investors awaited the release of inflation figures from the US Labor Department. The price is higher than expected. This applies to general and core inflation. Headline inflation rose to 3.1 to 3.4 percent and core inflation eased to 4 to 3.9 percent on an annual basis. A decline of 3.8 percent was earlier expected. Household expenses (accommodation expenses) rose 0.5 percent in December and 6.2 percent on a year-over-year basis. Also, car insurance, healthcare costs and prices of second-hand cars have increased.

Housing costs are expected to ease this year as rents for new leases decline. The Consumer Price Index (CPI) is strongly influenced by household expenditure, as household expenditure accounts for one-third of the CPI.

So the central bank’s monetary policymakers want to see super-core inflation. This is core inflation without taking into account housing costs. This inflation was 0.4 percent in December. For the Fed, this outcome is no reason to cut interest rates quickly.

The disappointing inflation figures are a result of rising costs in the service sector due to increased wage costs. In December, these costs rose 0.2 percent in line with inflation and 0.8 percent on a year-on-year basis.

These services rose by 0.4 percent in December and not less than 5.3 percent year-on-year.

Investors initially reacted negatively to the disappointing inflation figures. Ahead of the release of inflation data, several central bank officials played down expectations of a rapid rate cut. Ultimately, the damage to Wall Street was limited. Stock markets closed roughly flat as U.S. inflation rose to a target of 2 percent later this year.

Supply chains under pressure

This morning, the United States and the United Kingdom launched a joint strike against more than 60 targets in Yemen. According to US sources, warehouses, launch systems, production facilities and air defense systems have been neutralized. The military operation is in response to Houthi rebels’ attacks on ships in the Red Sea. Oil prices are on the rise due to tensions in the Middle East. A barrel of crude oil is trading above eighty dollars at midday.

Not only oil supply but other sectors are affected by disruptions in the supply chain. Most container ships no longer sail through the Red Sea, but choose the longer, safer route. They sail around the Cape of Good Hope in South Africa.

Tesla’s (NASDAQ: ) factory in Berlin will be closed for two weeks beginning Jan. 29 due to delays in parts deliveries. Tesla’s production depends on, among other things, Chinese battery supplies. Chinese carmaker Geely and Swedish interior design company Ikea have already warned of delays in deliveries.

So far, heightened geopolitical tensions have not had a negative impact on stock prices. All European stock markets rose this morning. Investors’ focus will shift in the coming weeks to the release of quarterly and annual figures by listed companies. This afternoon, several major US investment banks kicked off earnings season. At the start of a new year, there is more than normal interest in the prospects of companies.