Treasury outputs are steadily kept around 4.3% because traders are waiting for confirmation for inflation trends. A heteres expected PPI lecture could push the yields higher and challenge the story of the imminent speed reductions, while a softer number would reinforce the expectations for relieving halfway through the year.
Trade stresses can make the plans of the FED difficulty
While inflation seemed to moderate, the Federal Reserve remains careful due to external risks, in particular escalating trade tensions. President Trump has reconfirmed plans for extra rates for China, Canada and the EU, which expresses concern about higher import costs and retaliation measures. If trade disputes escalate, inflation could accelerate, forcing the FED to reconsider its tariff strategy.
With the meeting of the FED on 18-19 March, policymakers are generally expected to keep rates stable when updating economic projections. Traders currently expect three quarter -point reductions towards the end of the year, with the first in June. Today’s PPI data can shift those expectations if the inflation pressure continues to exist.