Does a Cooler CPI Signal Fed Flexibility?
May’s consumer price index rose 0.1%, undercutting economist estimates of 0.2%. Core CPI also landed at 0.1%, suggesting that price pressures remain tame despite tariff concerns. According to Goldman Sachs, companies may still be relying on existing inventories and delayed price adjustments in response to demand uncertainty.
This lighter CPI print gave bond yields some breathing room and helped reinforce bets that the Federal Reserve may have scope to ease policy if labor market data weakens further. For now, traders are focusing on upcoming job figures to gauge whether rate cuts may move from discussion to decision in the coming months.
Will the U.S.–China Deal Deliver Market Support?
Investors also digested early headlines from a preliminary U.S.–China trade outline reached in London. Under the proposal, China would resume rare earth mineral exports, while the U.S. would ease certain restrictions on tech sales. President Trump described the deal as “done, subject to final approval,” touting tariff advantages and concessions on education access for Chinese students.
Though the announcement offered a brief sentiment lift, traders remain skeptical until more specifics are finalized. Past negotiations have unraveled before full agreements were signed, keeping risk appetite in check.
Which Stocks Are Reacting at the Open?
Early movers reflected mixed sentiment. Warner Bros Discovery and First Solar rose over 2%, while Lockheed Martin and Nucor saw notable declines, shedding nearly 7% and 6%, respectively. Tesla also gained pre-market after announcing a July launch of its robotaxi program, adding a speculative bid to growth names.
Market Forecast: Will the Rally Resume or Stall Here?
With inflation data supportive and trade headlines encouraging but incomplete, markets may tread water near highs as traders await further catalysts. Eyes now turn to labor market data and Fed commentary.