US DATA: Dallas Fed WEI Surges In Latest Week, Still Points To Q1 GDP Cooldown

• Treasuries look to finish higher Tuesday - but well off this morning's knee-jerk post-CPI data highs as markets continue to digest multiple anomalies in the data set stemming from a reversal of November holiday sale discounting for goods products, along with sampling issues from the use of bimonthly metro area surveys (with no October data for comparison due to no survey that month).
• Currently, TYH6 trades +4 at 112-08.5 vs. 112-14 high, key short-term resistance is unchanged at 112-31, the Dec 18 high. 10Y yield -.0078 at 4.1674%.
• The range of significant anomalies on both ends of the table in the December data, and even within categories, has little obvious pattern, making the signal difficult to discern other than that the report overall should be taken with some caution.
• Within the core categories, the big surprise was that there was zero inflation in core goods prices despite anticipation that there would be "payback" in particular for unusually low holiday sales-related goods prices in November (along with continued expectations of tariff passthrough).
• Dollar strength has been most notable against the yen on Tuesday, with an impressive pre-data rally overnight consolidating post release as the domestic political backdrop in Japan continues to weigh on yen sentiment.
• Look ahead: tomorrow's data includes PPI, Retail Sales and Existing Home Sales data. Bank earnings resume tomorrow: Bank of America, Wells Fargo and Citigroup on Wednesday, Goldman Sachs, Blackrock and Morgan Stanley on Thursday.

-5,000 TUH6 104-08.37, post time bid at 1503:21ET, DV01 $191,000.

December's post-CPI reads by the Cleveland and Atlanta Feds showed a reversion to more typical median and "sticky" inflation rates after the distorted October/November data. In other words, there was some largely as-expected upside payback from the artificially soft readings in November, though the latest rates appear to be largely in line with the inflation pace seen in mid-year - suggesting only limited further disinflationary progress in breadth metrics at the end of the year.

• The M/M Cleveland Fed median picked up to 0.28% after 0.09% prior, in line with the figure seen in both July and August (and slightly higher than September's 0.20%), leaving the Y/Y rate fairly steady at 3.08%, lowest since Q3 2021. But the 16% trimmed mean figure roared back, up 0.31% M/M for the highest since June, and the Y/Y measure picking up to 2.95% after 2.90% prior.
• Meanwhile the Atlanta Fed's Sticky CPI ex-shelter rate picked up to aa 6-month high 0.29%, as the Y/Y run rate ticked up to a 3-month high 2.87%. Similarly, sticky core CPI ex-shelter rose to a 3-month high 0.22%, with Y/Y up 0.1pp to 2.67%. These paint a softer picture of underlying inflationary pressures on a 6-month annualized rate basis, down to 1.15% for sticky core ex-shelter (lowest since May).
• These analyses are further to MNI's analysis showing that the breadth of inflation pressures increased, led by core goods.  41% of ~190 items across the CPI basket saw price increases of 3% Y/Y or higher in December, up from 36% in Nov and 40% in Sep.