US Inflation Rises 0.2%, Bond Market Sinks Amid Trade Concerns

The latest U.S. inflation data, showing a 0.2% increase in the consumer price index for February, was unexpectedly low, providing some relief to markets amid ongoing concerns about economic slowdown and trade tensions. Despite the cooler inflation figures, which were below economists' expectations, U.S. Treasury yields rebounded as investors shifted focus to the potential impact of President Trump's tariff policies. Stock markets reacted positively, with the S&P 500 and Nasdaq-100 futures climbing over 1%, while the Dow Jones Industrial Average futures rose more than 300 points. However, the Federal Reserve is not expected to lower interest rates in the immediate future, as labor conditions and economic growth remain stable, and inflation is still above the Fed's target. Analysts noted that while the data is bond-friendly, the market's reaction was more aligned with equities, reflecting ongoing concerns about trade war implications. Overall, the inflation report offers the Fed some leeway in managing monetary policy amid the economic uncertainties.