Investors are shifting their focus away from inflation, as a cooler-than-expected February consumer-price index reading has sparked concerns over escalating trade tensions and potential economic slowdowns.
The February CPI rose 0.2%, the slowest pace in four months, and lower than economists’ expectations of 0.3%. This benign inflation print has led to a decrease in bond yields, indicating that investors are prioritizing risks associated with trade tensions over inflation concerns.
“This is the first time in the cycle where such a benign inflation print has been completely discounted in favor of other risks,” said a strategist. This signals that investors are worried about the potential impact of escalating trade tensions on prices and the economy, rather than the current low inflation levels.
Source: https://www.marketwatch.com/story/bond-rally-fizzles-despite-cool-cpi-inflation-reading-what-that-says-about-investors-b895d5f8