A relatively benign U.S. reading on consumer price increases triggered a sharp relief rally in stocks and bonds on Wednesday, but traders and investors warn that markets are likely to remain anxious about the pace of inflation.

Stock markets surged on Wednesday, buoyed by robust US bank earnings and encouraging inflation data from the United States and Britain.

Bitcoin has changed direction after weeks of retreat during which crypto investors dumped risky assets. The cryptocurrency rose 4% in the past 24 hours to $100,000 immediately following the release of closely-watched inflation data.

Annual inflation ticked up for a third straight month in December as food, energy costs rose, CPI report showed. But underlying price measure eased.

Federal Reserve policymakers may be able to reduce interest rates a couple of times this year, traders bet on Wednesday, after a government report helped allay fears that inflation was accelerating in the final full month of Joe Biden's presidency.