Fruit and vegetables are seen at a Walmart supermarket in Houston, Texas, on May 15, 2025.

Americans grew less fearful about inflation in May as President Donald Trump backed off the most severe of his tariff proposals, according to a New York Federal Reserve survey Monday.

The central bank’s Survey of Consumer Expectations showed that the one-year inflation outlook took a substantial dip, down to 3.2% — a 0.4 percentage point decrease from April.

At the three-year horizon, the outlook fell 0.2 percentage point to 3%, while the five-year forecast edged down to 2.6% from 2.7%.

While all three are still above the Fed’s 2% annual target, they represent progress and a change in a fearful attitude that coincided with Trump’s saber-rattling on tariffs, culminating with the April 2 “liberation day” announcement.

Trump initially slapped universal 10% tariffs on all U.S. imports and a menu of so-called reciprocal duties on dozens of nations. However, he soon backed off the latter measures, opting for a 90-day negotiating window that expires in July.

The New York Fed survey, which is less volatile than others such as the University of Michigan and Conference Board measures, provides some good news for the White House at a time when administration officials are trying to tamp down worries about tariff-induced inflation.

“By every measure of inflation, it’s down by more than it’s been in more than four years,” National Economic Council Director Kevin Hassett said Monday morning on CNBC’s “Squawk Box.” “While the tariff revenue has been going up, inflation has been coming down, which is contrary to the story that everybody else has been saying, but very consistent with what we’ve been saying.”

Inflation as measured by the Fed’s preferred personal consumption expenditures price index was at 2.1% in April, matching the lowest it’s been since February 2021. Excluding food and energy, core PCE stood at 2.5%, a gauge Fed officials believe is a better measure of longer-term trends.

The Fed survey showed expectations dipping across most price groups, though respondents did see food prices rising by 5.5% over the next year, a 0.4 percentage point increase from May and the most since October 2023. Elsewhere, respondents saw gas price increases easing to 2.7%, down 0.8 percentage point. The outlooks for medical care, college education and rent increases also were lower on a monthly basis.

There also was a positive move in employment, with those expecting to lose their job over the next 12 months dipping to 14.8%, down half a percentage point.

Other areas showed optimism as well: The probability of missing a minimum debt payment over the next three months fell half a point to 13.4%, its lowest since January. Respondents also had more confidence in stocks, with 36.3% expecting the market to be higher a year from now, up 0.6 percentage point.

Inflation cooled slightly in May, according to new data released Wednesday, bucking analysts’ expectations and offering a modest reprieve for American consumers.

Data from the Bureau of Labor Statistics showed that headline inflation rose 2.4% annually — up slightly from April’s 2.3%, but still below expectations. Month-over-month, prices climbed 0.1%, down from April’s 0.2% pace. Core inflation, a measure that excludes more volatile food and energy prices, also came in softer than expected.

Which prices rose, which prices fell While the overall numbers showed mild relief, the details still offered a mixed bag for consumers. Gasoline prices dropped in May, helping to drag down headline inflation. Airfares and used cars also continued to get cheaper.

But shelter costs — often the most painful part of the inflation picture — rose 0.3% on the month and 3.9% from a year earlier, accounting for the majority of May’s total price increase. The price of medical care, car insurance, furniture, and education all rose, too.

Tariffs in focus amid suggestions of a new China trade deal May’s Consumer Price Index report is the first to reflect, at least partially, the shifting landscape following President Donald Trump’s April “Liberation Day” tariff blitz. While many of the most sweeping tariffs were paused for 90 days pending trade negotiations, baseline 10% duties remain in effect for most partners, and some industry-specific tariffs, including those on steel and aluminum, doubled to 50% as of early June.

Just before the CPI data was released Wednesday morning, Trump announced a trade deal with China was “done,” pending approval from Beijing. “We are getting a total of 55% tariffs, China is getting 10%,” Trump posted on Truth Social, adding that China had agreed to supply “full magnets” and rare earths. The U.S., in turn, will continue allowing Chinese students to study in American universities.

The agreement, which some analysts have already labeled “tiny,” may ease tensions around key industrial inputs, but much remains uncertain. A recent federal appeals court ruling allowed Trump’s tariffs to temporarily proceed despite lower-court objections. Meanwhile, analysts say the actual pricing impact on consumers may materialize over the summer as importers work through pre-stocked inventory and adjust to new rules — whatever they may be.

Published on 06/09/2025 at 03:15, updated on 06/09/2025 at 03:16

By Dow Jones Newswires Staff

Below are the most important global events likely to affect FX and bond markets in the week starting June 9.

U.S. inflation data for May will be in focus as investors watch for any signs of tariffs feeding through into prices ahead of a decision by the U.S. Federal Reserve later this month.

Further comments from U.S. President Trump on tariffs, as well as developments with Trump’s feud with Elon Musk will continue to be closely monitored.

In Asia, key economic indicators from China and Japan could shape the regional growth outlook. In Europe, eurozone trade and industrial production and U.K. gross domestic product data will be in focus.

U.S.

U.S. inflation data for May are due on Wednesday and are likely to be the highlight of economic data in the coming week.

These will be scrutinized for any signs that Trump’s tariffs are feeding through into prices.

Inflation is expected to be too high for the Federal Reserve to consider cutting interest rates just yet, although analysts expect that services inflation could show signs of slowing.

High inflation could reduce the prospects of the Fed cutting rates until later in the year. Some analysts say it might not reduce rates again until early 2026.

Economists at Barclays expect the inflation data to show “the first signs of tariff-related price pressures,” they said in a note. They anticipate upward price pressures on “a wide range of core goods categories,” including apparel, household furnishings, new cars and “other” goods.

Investors will also be looking for further signals on how the U.S. economy is faring.

Recent U.S. monthly jobs data for May showed the jobs market has so far held up better than economists had expected, easing concerns that the economy could be slowing while inflation rises.

Still, data are so far inconclusive. Recent ADP private payrolls figures were weak, as were survey data on manufacturing and services activity.

Other data due during the week include producer prices for May and weekly jobless claims on Thursday.

The Treasury will auction $58 billion in three-year notes on Tuesday; $39 billion in 10-year notes on Wednesday and $22 billion on Thursday.

EUROZONE

A quiet week will follow the European Central Bank’s 25-basis-point interest-rate cut, and Monday will be a market holiday.

Data on eurozone industrial production and foreign trade data for April are likely to be the highlight of the week as investors look to see how tariffs have affected the economy.

“Eurozone trade data for April will be key to watch for signs of the first hit to exports following the U.S. tariffs,” economists at ABN Amro said in a note. Industrial production data could also reveal “some early impact from falling exports.”

Final French and Spanish CPI data for May are due on Friday.

Government-bond supply during the week includes Germany tapping the April 2030-dated Bobl on Tuesday and the February 2035-dated Bund on Wednesday. Other issuers include the Netherlands and Finland on Tuesday, Portugal on Wednesday and Italy on Thursday.

U.K.

A slew of data in the coming week will give signs of how well the U.K. economy is faring.

These include jobs data on Tuesday, followed by gross domestic product figures for April on Thursday, alongside industrial production and trade figures for the same month.

Investec expects the economy contracted by 0.2% during April after a strong first quarter.

U.S. tariff announcements in April likely hurt the manufacturing sector, although unusually sunny weather could have boosted the services sector, Investec economist Sandra Horsfield said in a note.

Other data include the latest retail sales numbers for May from the British Retail Consortium, due Tuesday.

Attention will also focus on U.K. treasury chief Rachel Reeves’s spending review on Wednesday. Here, she will allocate the total government expenditure set out in the March budget across the various government departments over the next financial year.

The U.K. plans to launch a new September 2038 index-linked gilt via syndication during the week. It also plans to sell March 2035 gilts via auction on Wednesday.

SWITZERLAND

Switzerland will conduct its monthly auction on Wednesday.

SCANDINAVIA

Sweden and Norway hold bond auctions on Wednesday.

JAPAN

Japan’s revised first-quarter gross domestic product print, due Monday, is expected to confirm that the economy shrank at an annualized pace of 0.7%, as initially reported. With exports hit by tariffs and domestic consumption damped by inflation, Japan risks entering a technical recession this quarter.

April’s current-account balance and May’s bank lending figures will also be released Monday.

The Bank of Japan will conduct scheduled Japanese government bond purchases on Monday and Friday, covering tenors from 1-year to over 25 years. These operations are expected to support bond market liquidity. The ministry of finance will also auction Treasury discount bills and hold liquidity enhancement auctions during the week.

CHINA

China’s inflation and trade data for May will offer fresh clues on the progress of the uneven recovery in the world’s second-largest economy.

A poll of economists by The Wall Street Journal suggests that China’s consumer and factory-gate prices likely fell further last month, signaling weaker domestic demand amid looming trade barriers. The consumer price index is expected to have slipped 0.2% from a year earlier, following April’s 0.1% decline. Producer prices likely fell 3.2%, down from a 2.7% decline the previous month.

“Inflation in China remains nailed to the floor – on some measures, even well below it,” said HSBC’s Frederic Neumann. Persistently low price pressures erode profits and tax revenue and leave consumers with little appetite to spend, he said. Further signs of cooling price growth will underscore the need for aggressive stimulus to prevent deflation expectations from becoming entrenched.

Trade figures may add to the gloom. According to the WSJ poll, exports likely slowed in May, despite a tariff truce between Beijing and Washington. Chinese exports are projected to have risen 5.6% from a year earlier, compared with April’s 8.1% gain. With average U.S. tariffs on Chinese goods still hovering around 40%, many economists expect Chinese exports to fall sharply later this year unless a trade agreement is reached.

China’s imports were likely flat, following a 0.2% decline in April.

AUSTRALIA/NEW ZEALAND

Australia is expected to have a quiet week, with bond traders focused on the National Australia Bank’s May business survey, due Tuesday.

Although the Reserve Bank of Australia cut interest in May, it refrained from a deeper cut, citing its business liaison program, which had yet to detect a significant slowdown despite the disruption caused by the Trump administration’s trade policies.

If the NAB survey shows a sharp deterioration in both business confidence and conditions, expectations for another interest rate cut in July will grow stronger. Weak first-quarter GDP and subdued inflation data have already pushed a July cut into likely territory. A major drop in sentiment could seal the case for further easing.

INDIA

India’s inflation data on Thursday will help assess whether consumer prices are continuing to ease, supporting the central bank’s recent decision to cut interest rates.

Softer inflation was a key driver behind the Reserve Bank of India’s latest rate move. May’s CPI reading is expected to confirm the central bank’s view of a broader disinflationary trend. Food prices will be in focus, as volatility in that category has been a source of concern for the RBI.

Citi Research analysts expect May CPI at around 3%. That would be steady from the prior month’s reading. “Food and beverage inflation is likely to fall to 1.9%,” they said.

On Friday, trade figures give a glimpse into the strength of exports in May. Worries about trade tariffs have clouded the outlook for Asian exports, and the RBI has said it is monitoring the risk to India closely.

TAIWAN

Taiwan’s trade data for May, due Monday, could reveal a slowdown in export growth after a strong run in recent months.

The island’s goods, particularly semiconductors and electronics, have been in high demand, buoyed by the artificial-intelligence boom and a broader tech upcycle. But tariff headwinds threaten to slow the momentum, which has likely been supported by front-loading ahead of potential U.S. trade barriers.

Economists at Goldman Sachs expect Taiwan’s exports to decline on a seasonally adjusted monthly basis in May, “normalizing from unexpected strength in the previous three months.” The pullback may be driven by a dip in U.S.-bound shipments from historically elevated levels. They forecast year-on-year growth at 23.5%, down from 29.9% in April.

Any references to days are in local times.

Write to Jessica Fleetham at jessica.fleetham@wsj.com and Jihye Lee at jihye.lee@wsj.com

(END) Dow Jones Newswires

06-09-25 0314ET

Crypto markets tread water ahead of U.S. CPI data, as analysts warn a hotter-than-expected print could delay rate cuts and test Bitcoin’s support.

The May CPI report came in softer than expected, offering a reassuring signal for markets. The second month-over-month headline inflation increase was only 0.1% compared to the expected increase of 0.2%. The core CPI (excluding food and energy) was also up only 0.1%, below this month’s expected increase of 0.3%.

All of the above was on a year-over-year basis, headline CPI was reported at 2.4%, which was exactly where it was expected, while Core CPI was 2.8% year-over-year, just below the expected 2.9%.

Shelter and food rose in May, but falling energy prices kept CPI to just 0.1% MoM.

The weak core implies moderating underlying price pressures and could give the Fed some cover to cut rates if necessary later this year.

Global markets were on the edge of their seats with only minutes to go until the release of the U.S. Consumer Price Index (CPI) for May.

Analysts on CPI data and crypto markets

According to analysts at 10x Research, although today’s data will be the first to account for the effects of President Donald Trump’s re-imposition of tariffs, they expect a “flat or modestly higher” CPI, which should minimize concerns about a significant uptick in inflation.

10x Research model shows U.S. inflation easing toward the Fed’s 2% target, with CPI YoY now at 2.41%.

While there were initial concerns that companies would pass the tariffs on to consumers, it now seems likely that companies will absorb the costs associated with the tariffs.

Although they are likely to have considerable inventory, stockpiling has not yet elevated prices. “For the bearish narrative to regain traction, a new catalyst is needed,” they claim.

According to Bitunix analysts, it could be a pivotal time for crypto. If inflation surprises on the upside, Bitcoin could test support at $106,000. At the other end, if inflation comes in ‘cooler’ than expected, Bitcoin prices could see resistance at $110,350.

“Short-term movements will remain event-driven,” they say, with the market largely awaiting signals from the Fed around interest rate policy.

Bitcoin is currently trading at $109,225, unchanged for the day, while Ethereum trades at $2,766.83 and Solana has gained 2.2% to $164.22 in the last 24 hours. The total crypto market cap is $3.56 trillion, down 1.4% during the previous 24 hours.

With CPI expectations ‘finely tuned’ and the Fed expected to remain on the sidelines, traders are preparing for volatility. But until a stronger inflation print—or a new macro catalyst—emerges, markets may remain in consolidation mode.

The US and China agreed to a framework and implementation plan to ease tariff and trade tensions on Tuesday. President Trump signaled his approval, saying the deal was “done” pending sign-off from him and Chinese President Xi Jinping.

Trump and other US officials indicated the deal should resolve issues between the two countries on rare earths and magnets. Trump said Wednesday that the US will allow Chinese students in US colleges, a sticking point that had emerged in the weeks following the countries’ mid-May deal in Geneva.

Trump, however, made no mention of loosening US export controls, particularly on the design and manufacture of semiconductors.

Trump said the US would impose a total of 55% tariffs on Chinese goods. Yahoo Finance’s Ben Werschkul reports, citing a White House official, that Trump arrived at that figure by adding together an array of preexisting duties and not any new tariffs.

The president combined the existing 20% tariffs over illegal drugs and migration with 10% “Liberation Day” tariffs, with other sector-specific duties in place that average out to 25% — but only apply to certain goods.

Outside analysts, such as the budget lab at Yale, have calculated that the effective tariff rate on China overall is more like 33%. Trump said China’s tariffs on US imports would be 10%.

Meanwhile, though Trump’s most sweeping tariffs continue to face legal uncertainty, on Tuesday, the president received a favorable update. A federal appeals court held a decision saying his tariffs can temporarily stay in effect. The US Court of International Trade had blocked their implementation last month, deeming the method used to enact them “unlawful.”

Trump celebrated the ruling as a “great and important win.”

Read more: What Trump’s tariffs mean for the economy and your wallet

The latest twists and turns in Trump’s trade policy come as the president pushes countries to speed up negotiations. The US sent a letter to partners as a “friendly reminder” that Trump’s self-imposed 90-day pause on sweeping “reciprocal” tariffs is set to expire in early July.

White House advisers have for weeks promised trade deals in the “not-too-distant future,” with the only announced agreement so far coming with the United Kingdom. US and Indian officials held trade talks this week and agreed to extend those discussions on Monday and Tuesday ahead of the July 9 deadline.

Here are the latest updates as the policy reverberates around the world.

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