The U.S. Treasury yields fell on Wednesday, driven by latest inflation data. The Treasury yield fell by about 3 basis points in 2010 to 4.255%, but the two-year financial yield fell by 3.711%, above one basis point.
Inflation data, along with the Bureau of Labor Statistics, is softer than expected display The consumer price index (CPI) in July was stable at 2.7%. Analysts at Goldman Sachs and JPMorgan had forecast a 2.8% year-on-year increase in inflation, up from 2.7% the previous month.
Tariff Impact Inflation Data
Response to US inflation
The CORE CPI in July rose by 0.3%, consistent with the long-term average, from 0.2% in June. The rise challenges the Fed’s disinflation narrative, but the market was leaning towards dish. https://t.co/dklseadmwm
– exness (@exness) August 12, 2025
The U.S. Bureau of Labor Statistics has shown that core inflation data has skyrocketed in recent months, up about 3.1% from July 2024 to July 2025. Core CPI has risen from a 2.9% annual pace in June, making it the fastest annual rate for CORE CPI since February.
Michael Pierce, the assistant secretary of US economics at Oxford Economics, expects core inflation to rise to another 3.8% by the end of the year. He believes that tariffs will reduce more impact on consumer prices.
US President Donald Trump I said On Tuesday, tariffs did not cause any country’s inflation or other issues. He also argued that consumers are not paying tariffs, but most businesses and governments pay it.
Analysts at Deutsche Bank said in the memo that when analysing the impact of tariffs, it is worth noting that tariff rates in effect have fluctuated significantly in recent months. They argued that the full impact would be difficult to measure because tariffs were not rising in the straight line.
Bank analysts believe that tax gusts were imposed on August 7th, which could take some time before there is a clear signal to the impact of tariffs on inflation.
Moody’s chief economist Mark Zandy argued that tariff policy had an impact on the inflation report. He also argued that they could have a greater impact in the coming months.
Core CPI, which excludes food and energy products, has risen 0.2% for each of the last two months. Zandi also acknowledged that their rise is clear evidence of the impact of tariffs.
Core commodity inflation also rose the fastest since 2022, reaching 1.2% in July. Pierce said the range of commodity prices is rising and there are clear indications that it is pushing inflation in core commodities to a height of over two years.
Sarahaus, a senior economist at Wells Fargo Economics, noted that the full impact of tariffs is likely to be dragged over months before businesses know where tariffs will settle. She also believes that companies may be selling old stocks that are not yet subject to import duties.
Investors are hoping the Fed will cut fees in September
Federal Reserve Chairman Jerome Powell I said Last month, the economy has yet to see a place where trade policy settles. The latest inflation report came ahead of the Aug. 21-23 Fed meeting held in Jackson Hole, Wyoming. Investors are hoping to cut interest rates three times this year, so the Fed is making it possible to change its monetary policy decisions.
According to CME’s FedWatch tool, traders Expectations Interest rate cuts at the Fed’s September meeting rose to 98.1%. The possibility of central banks changing prices in October also rose to 67.1%, with a 57.3% chance of the month in December.
“Jerome ‘too late’ Powell now has to lower his rate. The damage he inflicted by being too late is immeasurable. ”
–Donald TrumpPresident of the United States.
Federal President Richmond Thomas Birkin argued that it is still unclear whether the central bank will prioritize inflation control or labor market support. He argued that tariff negotiations, tax laws and consumer sentiment were improving. Birkin believes pressure will be placed on inflation as well as unemployment, but the balance between the two remains unknown.
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