Softer Inflation Data Overshadowed by Market Volatility

• What is usually a major market mover, U.S. CPI was largely overshadowed by volatility surrounding Trump’s tariff announcements.
• U.S. CPI fell 0.1% m/m, with annual inflation easing to 2.4% and core inflation to 2.8%, both below expectations and supporting further FOMC rate cut pricing.
• Despite the soft print, Fed officials were quick to push back, highlighting the importance of anchoring inflation expectations before easing policy too soon.
• Equity markets remain volatile, with the S&P 500 declining, likely on renewed fears around the escalating US–China trade war.
• Front-end U.S. Treasuries rallied on the soft inflation print, while longer-end yields continued to drift higher, leading to curve steepening.
• The RBA outlook is tracking global sentiment, with cash rate futures now pricing in five cuts by year-end, reinforcing the local market’s bullish bias on rates.