Inflation

• The Federal Reserve released minutes from its April 16 policy meeting, revealing internal division over the appropriate timeline for interest rate cuts, with several governors questioning whether inflation has declined sufficiently to warrant near-term reductions. • Hawks on the committee expressed concern that premature rate cuts could reignite price pressures, while doves argued that pausing at 5.5% risks unnecessarily constraining growth and employment, setting the stage for a contentious May 2 vote. • Market reactions to the minutes were mixed, with bond futures pricing in only a 28% probability of a rate cut by July 2026, down from 35% before the release, while equity index futures declined 0.6% on expectation of extended higher rates.

Annual March rate adds to pressure on household finances and follows warnings of slowdown to UK economyUK inflation rose by 3.3% in March amid the surge in fuel prices for motorists triggered by the Iran war.Figures from the Office for National Statistics (ONS) show the consumer prices index increased last month from 3% in February, adding to pressure on household finances already battered by a cost of living crisis. The rise matched City economists’s forecast of an increase to 3.3%. Continue reading...

• The 10-year U.S. Treasury yield declined following the latest inflation report on April 10, 2026, easing from recent levels. • Equity futures pointed higher as markets opened, buoyed by the Treasury movement and broader optimism. • This reaction comes amid mixed Wall Street close and anticipation of U.S.-Iran diplomatic talks, influencing bond and stock positioning.

• Federal Reserve policymakers indicated Wednesday they are unlikely to cut interest rates in the near term, citing persistent inflation pressures that exceed the central bank's 2% target. • Multiple Fed officials, including those from major regional banks, cited "hotter-than-expected" March inflation readings as justification for holding rates steady through at least mid-2026. • Market expectations for rate cuts have shifted significantly, with futures traders now pricing in the first possible cut in September 2026 rather than June, reflecting the hawkish pivot.

• The 10-year U.S. Treasury yield climbed to 4.52% Thursday following stronger-than-anticipated producer price inflation data released by the Labor Department, pushing expectations for prolonged higher rates. • Market participants reassessed bets on future rate cuts after Fed speakers emphasized the need for additional months of restrictive policy to bring inflation back toward target levels. • The yield curve steepened significantly, with the 2-year-10-year spread widening to 87 basis points, reflecting growing uncertainty about the timing and magnitude of eventual rate cuts.

Prices were up 3.3% over the year, adding to the unpredictability that first came with Trump tariffsSign up for the Breaking News US email to get newsletter alerts in your inboxUS inflation soared in March amid the US-Israel war with Iran, with prices up 0.9% compared to last month and 3.3% over the year, according to new data released Friday.The spike in the consumer price index (CPI), which measures the price of a basket of goods and services, is the largest in nearly two years and the first official measure of how the conflict has impacted US consumer prices, particularly as Iran blocked the strait of Hormuz, where a fifth of the world’s oil and gas would typically pass through. Continue reading...