In December, the U.S. annual inflation rate came in at 2.9%, slightly above the market estimate of 2.8%, rising from 2.7% in November. The increase was driven primarily by higher energy costs, with gasoline prices climbing 4.4%. Core inflation, which excludes food and energy, edged down to 3.2%, slightly below expectations of 3.3%, and down from 3.3% the previous month. Bond markets rallied on lower-than-expected core inflation figures with 10-year treasury yields falling to 4.7% from 4.8%, whilst U.S. equity markets opened higher following a weak start to the trading week. The recent market moves reflect growing investor optimism, without dashing hopes that the Federal Reserve will be able to cut interest rates in 2025.