Emre Yumlu 
Markets Cautious Ahead of U.S. Inflation Data: How Will the Fed’s Rate Decisions, Dollar, Bond Yields, and Cryptocurrencies Be Affected?
Markets Focus on Inflation Data: What Could Happen After the Release?
U.S. and global markets are closely watching the U.S. annual inflation data, set to be released today at 3:30 PM (EST). (Expectation: 2.9%, Previous: 3.0%). As this data is crucial for the Fed’s monetary policy decisions, investors are approaching the market with caution due to uncertainty.
Trade policies and tariffs in the U.S. are putting pressure on the markets, while Trump’s statements continue to impact risk appetite. Concerns about trade wars, particularly regarding Canadian steel and aluminum tariffs, are increasing.
Market Expectations:
Investors are pricing in a possible Fed rate cut in June, with bond yields and the U.S. dollar index showing limited movement. European stock markets are trading in negative territory, while Asian markets present a mixed outlook.
Potential Impacts of Inflation Data:
- Higher-than-expected inflation: The Fed may delay rate cuts, leading to increased market volatility.
- In-line or lower-than-expected inflation: This could boost risk appetite and have a positive impact on markets.
Key assets that are likely to react to the inflation data include: U.S. bond yields, U.S. dollar index, Cryptocurrencies, Gold prices.
Survey Insights: What Are Consumers Expecting?
According to the New York Fed’s February 2025 Consumer Expectations Survey, short-term inflation expectations increased from 3% to 3.1%, marking the first rise in four months. This indicates a shift in consumer perception of prices.
However, the three-year and five-year inflation expectations remained stable at 3%. Meanwhile, household income expectations rose to 3.1%, while spending expectations saw a sharper increase, reaching 5%.
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