Markets Focus on Inflation Ahead of Holiday

Inflation concerns are resurfacing in the markets amid uncertainties surrounding Donald Trump's trade policies, particularly his threats of imposing tariffs on imports from Canada, Mexico, and China. Experts warn that these tariffs could exacerbate supply chain bottlenecks and reignite inflation, with Deutsche Bank predicting a potential increase in core personal consumption expenditures. Meanwhile, the US Dollar Index has weakened, influenced by lower US yields and adjustments to month-end flows, leading to a rise in the EUR/USD pair. Despite trade jitters, US stock indexes, particularly the S&P 500, have shown resilience, closing at record highs, fueled by consumer confidence and expectations of tax cuts. Traders are currently speculating on future Federal Reserve interest rate cuts, even as the Fed remains cautious about the economic impacts of Trump's policies. As the holiday season approaches, market trading is expected to thin, with analysts closely monitoring upcoming inflation data from Europe and the US.