2 TRON data lower than expected, increase slows

The US Bureau of Labor Statistics (BLS) released the latest inflation data on Wednesday, showing that the Consumer Price Index (CPI) rose 0.2% month-on-month in February, lower than market expectations, bringing the year-on-year rate to 2.8%. This data indicates that the price increase has slowed, down 0.1 percentage point from the market's expected 2.9%.

Core CPI (the core indicator excluding food and energy prices) also rose 0.2%, with a year-on-year rate of 3.1%, lower than the market forecast of 3.2%.

Tariff policy affects market confidence, inflationary pressure weakens

Economists believe that one of the reasons for the lower-than-expected inflation data may be related to the market's concerns about the potential impact of tariffs. As the government discusses imposing additional tariffs on imported goods, businesses and consumers are cautious about future price trends, which may prompt businesses to slow the pace of price adjustments to adapt to the uncertain market environment.

Market reaction: stock market optimistic, bond market divergent

After the data release, US stock market futures maintained a positive trend, indicating that investors are optimistic about the cooling of inflation. However, US Treasury yields showed a divergent trend, with short-term rates changing little, while long-term rates fell slightly, reflecting the market's different interpretations of economic growth and monetary policy.

Inflation trend and Fed policy outlook

Due to the slowdown in inflation, the market has begun to focus on whether the US Federal Reserve (Fed) will adjust its monetary policy within this year. The Fed had previously stated that it would need to see inflation steadily decline to the 2% target before considering rate cuts. Although this data is lower than expected, core inflation is still at a high level of 3.1%, indicating that price pressures have not yet fully subsided.

Going forward, the market will closely monitor the upcoming employment data and the comments of Fed policymakers to assess the future direction of monetary policy. If future data shows further declines in inflation, the Fed may consider rate cuts within the year, further impacting market trends.