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[HFM]

Date: 16th July 2025.


Mixed US CPI Data Clouds Fed Outlook While Global Markets React to Tariff Jitters.



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US financial markets remained choppy following the release of June's CPI report, which presented a mixed inflation picture. While headline consumer prices rose 0.3%—the largest gain since January—core inflation cooled slightly, increasing by just 0.2%. This combination has left investors and policymakers without a clear signal on the direction of the US economy, tempering hopes for a Federal Reserve rate cut in the near term.


Rate cut expectations for the September FOMC meeting slipped to 60%, down from 68% earlier this week. Fed fund futures now reflect a lower implied rate of -14 basis points for September, compared to -18.8 bps after the June jobs report and -29 bps following weaker-than-expected ADP data on July 2. The probability of a second cut in December has also decreased, with the December contract pricing in -44 bps, down from a fully priced -50 bps earlier.


Inflation Drivers and Tariff Impact


June's CPI surge was driven by a 0.9% increase in energy prices, including a 1.0% rise in gasoline costs. Other contributors included medical care services (+0.6%), tobacco (+0.5%), and apparel (+0.4%). Meanwhile, vehicle prices dragged on the index, with new vehicles falling by 0.3% and used vehicles declining by 0.7%. Year-over-year, headline CPI rose to 2.7%, while core CPI edged up to 2.9%.


Economists attribute much of the price pressure to the Trump administration’s tariff increases, particularly in sectors like coffee, furniture, and pharmaceuticals. As Fed Chair Jerome Powell previously warned, the inflationary effects of these tariffs are beginning to show, and could continue building into the third quarter, especially as the August 1 tariff deadline approaches.


Treasury Yields Rise, Nasdaq Hits Record


Despite the cooler core reading, Treasury yields rose sharply, with the 10-year yield reaching 4.495%, the highest since June 11. This movement was partially driven by technical selling and growing concerns that tariff-induced price hikes could spill over into PCE inflation data. Meanwhile, the tech-heavy Nasdaq rallied to fresh record highs, supported by a strong performance from AI bellwether Nvidia.


Global Central Banks in Focus


The Bank of England is also facing inflation challenges. UK inflation unexpectedly accelerated, with headline CPI rising to 3.6% year-over-year and core CPI climbing to 3.7%. Services inflation held steady at a concerning 4.7%. BoE policymaker Catherine Mann warned that job insecurity is driving consumer caution and increased savings, which may weigh on growth sectors like retail and hospitality.


While another rate cut in August is still likely, these inflation numbers may reduce the likelihood of a rapid easing cycle.





Asia, Oil, and Commodities


Asian equity markets were broadly under pressure as rising US yields and a stronger dollar weighed on investor sentiment. The dollar climbed to its highest against the yen since early April, driven by speculation that the Fed may delay any easing. Mainland Chinese blue chips fell 0.5%, while South Korea's KOSPI declined 1%. Taiwan’s tech-heavy index bucked the trend, rising 0.9%.


Meanwhile, oil prices hovered near recent lows, with Brent crude trading at $68.96 a barrel. Despite rising global inventories, Morgan Stanley noted that much of the buildup occurred outside OECD nations, limiting its impact on futures pricing. The bank retained its Brent forecast at $65 for Q4 2025, but warned that post-summer demand might not be enough to prevent a renewed surplus.


Gold regained ground, trading near $3,340 an ounce, supported by continued geopolitical tensions and strong central bank buying. Bitcoin, meanwhile, rebounded 1% after a recent pullback from its record high above $123,000.





Looking Ahead


Investors are now turning their attention to upcoming producer price data for additional clues on inflationary trends. Meanwhile, earnings season is ramping up, with mixed results from major banks like JPMorgan and Citigroup and more reports due from Goldman Sachs, Morgan Stanley, and Bank of America.


As global markets continue to digest a flurry of data and geopolitical developments, the coming weeks may provide more clarity on central bank policy paths and broader economic trends.


Always trade with strict risk management. Your capital is the single most important aspect of your trading business.


Please note that times displayed based on local time zone and are from time of writing this report.


Click HERE to access the full HFM Economic calendar.


Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!


Click HERE to READ more Market news.


Andria Pichidi
HFMarkets


Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

[HFM]

Date: 31st July 2025.


BOJ Hints at Rate Hike with Inflation Upgrade, But Trump Tariffs Delay Clear Signal.



Trading Leveraged products is Risky


BOJ Moves Closer to Tightening, But Timing Still Murky


The Bank of Japan (BOJ) kept interest rates steady at 0.5% during its July policy meeting but raised its inflation forecasts more than expected, signalling that the era of ultra-accommodative monetary policy may be drawing to a close.


However, Governor Kazuo Ueda and the policy board refrained from giving any guidance on the timing of the next hike, citing ‘high uncertainties’ stemming from new US trade tariffs and domestic political instability.


Inflation Forecast Raised to 2.7%: What It Means


In its quarterly economic outlook, the BOJ lifted its FY2025 inflation forecast to 2.7% from 2.2% and nudged up its projections for 2026 and 2027. The upgrades reflect ongoing price pressures, particularly from food and commodity imports. The BOJ’s upward revision of its price outlook does make it seem like a rate hike is coming closer. But Ueda reiterated that supply-side factors are driving inflation, suggesting policymakers are reluctant to respond with rate hikes unless wage growth and demand-driven inflation strengthen further.


Tariffs Keep Policy Outlook Cautious


A major source of uncertainty is President Trump’s new wave of tariffs, including on Japanese autos and industrial goods. While Japan reached a partial agreement with the US to reduce some levies, the BOJ is waiting to see how these measures affect exports, corporate profits, and investment.


This caution was reflected in a softened tone in the BOJ’s risk assessment, shifting from ‘extremely high’ to simply ‘high’ trade-related uncertainties.


‘There have been positive developments in trade and other policies,’ the BOJ noted, but added that more data is needed to support a rate hike.


Political Backdrop: Another Obstacle


Japan’s domestic political scene is adding further complexity. Prime Minister Shigeru Ishiba’s coalition suffered a significant setback in the recent upper house elections. Some members of the ruling Liberal Democratic Party are now pushing for leadership changes, which could impact fiscal policy and BOJ coordination.


Any rate move could become politically sensitive, especially if borrowing costs rise at a time when consumer inflation is already weighing on household budgets.





Market Reaction: Yen, Bonds, and Global Spillovers


The yen initially rallied following the announcement, but lost ground as Ueda failed to provide forward guidance on rates. USDJPY remains near the psychologically important 150 level.


Meanwhile, Japanese government bond yields have inched higher, with the 10-year yield approaching 1%, spilling over into global bond markets. US Treasuries also saw upward pressure after Powell’s hawkish tone, tightening financial conditions worldwide.


What’s Next? Eyes on December


While the BOJ appears to be preparing the ground for a year-end rate hike, the central bank is signalling that it will not move prematurely. The next few months will be critical as officials monitor wage growth, trade developments, and domestic demand. It is expected that the BOJ will act by December if growth holds up and the tariff impact is manageable.


Always trade with strict risk management. Your capital is the single most important aspect of your trading business.


Please note that times displayed based on local time zone and are from time of writing this report.


Click HERE to access the full HFM Economic calendar.


Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!


Click HERE to READ more Market news.


Andria Pichidi
HFMarkets


Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.