Inflation traders are preparing for a potential short-term shock in price gains as the US consumer-price index is expected to post seven consecutive months with annual headline readings near or above 3%. According to Gang Hu, a trader at New York hedge fund WinShore Capital Partners, the inflation market has already factored in tariffs and immigration policies.
Hu’s predictions on inflation have proven accurate in the past. In July 2022, he stated that there was no reason for inflation to decrease rapidly. He also argued against multiple interest-rate cuts by Federal Reserve officials at the end of 2023, despite many traders expecting it. The Fed didn’t lower rates until September 2024, when it delivered its first rate cut.
Traders are bracing for a potential short-term shock in price gains as inflation expectations remain high.
Source: https://www.marketwatch.com/story/inflation-traders-brace-for-short-term-shock-from-tariffs-immigration-policies-e64c7003