Conflict pressures in the bond market stepped up on Wednesday after Inflation data warmer than expectations caused earlier concern for slowing down the economic economy with the president Donald TrumpTrade policies.
Consumer prices have increased by 3% compared to one year, exceeding 2.9% expectations and marking the fourth consecutive increase in annual inflation. A monthly reading increased 0.5%, which is the highest increase in August 2023.
“There is a fundamental fear that growth could slow down,” Apollo’s chief economist Torsten Slok said the Financial Times On Monday, quoting concerns for a trade war. However, inflation data on Wednesday redirected the market focus on price pressure.
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The US dollar, which has slipped 0.4%since the beginning of January, has reversed the course with 0.5%on Wednesday. Treasury yields, which decreased to 4.54% compared to the excess of January of 4.8%, jumped 10 base points after a report on the consumer prices index.
Traders now expect that the first decrease in federal reserves will come not before December, with the second cut for September 2026, according to CME Fedwatch data. It is a shift from earlier market expectations.
President Donald Trump To the truth socially Wednesday called for lower interest rates, suggesting that the move would supplement his tariff policy. It comes as his administration delayed 25% of tariffs on Mexico and Canada while implementing 10% additional tariffs to Chinese imports.
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Basic inflation, without food and energy, increased 3.3% compared to the year, more than 3.1%. Among the main components of the CPI, the oil of 6.2% of the month jumped, while the meat index, poultry, fish and eggs rose 1.9%.
Egg prices only increased 15.2%, which is the highest increase in June 2015, which made up about two -thirds of the monthly food increase.
“If the Fed really binded on its goal of 2%inflation, the market participants would talk about the potential increase in the rate, not just a longer pause in the cutting cycle,” chief economic adviser Allianz Mohamed El-Erian said on X.
Inflation information complicates the outbreaks for emerging markets, which has shown resistance to Trump trade policy. Ever since his second term began, Chilean Peso has gained over 3%, while Colombian Peso and Brazilian Real have increased more than 6% compared to the dollar.
