Bond Yields Spike as Tariffs Fuel Inflation Fears 16/07/2025

HOT stories for today

US market wrap:

• Big-cap tech stocks led Wall Street higher on Tuesday, as investors welcomed news that Nvidia Corp. (NVDA) and Advanced Micro Devices Inc. (AMD) would reenter the Chinese AI market. However, the broader market missed the rally. The S&P 500 slipped 0.4%, after fluctuating between gains and losses in the final trading hour, while the Dow Jones Industrial Average dropped over 400 points. The Nasdaq Composite outperformed, gaining around 0.2% to notch a new record close, powered by strength in Nvidia shares. 
• At the same time, June’s CPI inflation report put pressure on sentiment, as monthly prices rose 0.3% and annual inflation hit 2.7%, matching forecasts but highlighting the economic impact of Trump’s tariffs. Major U.S. banks reported strong second-quarter results, driven by robust trading revenues and IPO activity, though executives warned of potential challenges ahead.

Bond Yields Spike as Tariffs Fuel Inflation Fears

• The U.S. bond market sent a warning to investors Tuesday as Treasury yields surged, with the 30-year yield (TMUBMUSD30Y) breaking above 5%, signaling inflation risks that could keep borrowing costs elevated and pressure equities. Unlike May’s spike tied to fiscal concerns, this jump followed June’s CPI report, showing the sharpest monthly price increase since January, with tariff-sensitive goods like furniture and appliances driving inflation higher. 
• Markets are now doubting whether the Federal Reserve can deliver two rate cuts this year, as higher yields suggest rates may need to stay elevated longer amid persistent tariff-driven price pressures. With further tariff hikes looming on August 1, bond markets suggest that inflation may prove more difficult to tame, posing new risks for stocks and rate-sensitive sectors. Above that, this CPI reading won’t just measure inflation; it may reveal whether tariffs are quietly shifting the landscape of U.S. consumer prices.

Stocks on the move:

• Global Payments (GPN): Shares of the fintech firm climbed around 5% after a Financial Times report revealed that activist investor Elliott Management has increased its position in the company.
• Park Aerospace (PKE): The aerospace manufacturer slipped over 3% after reporting first-quarter adjusted earnings of 10 cents per share, a slight uptick from 9 cents per share a year earlier.
• J.B. Hunt Transport Services (JBHT): The logistics and transportation company dropped more than 3% following a second-quarter earnings miss. The firm posted $1.31 per share, just below the $1.32 expected by analysts surveyed by LSEG.
• Omnicom Group (OMC): Shares of the marketing and communications giant rose more than 2% after the company beat Wall Street expectations on both revenue and earnings in its second-quarter report.

Watchlist: NVDA, AMD, JBHT, OMC, GPN, JNJ, BAC, GS, MS

Today’s action

• Asia-Pacific markets traded mixed after U.S. President Trump announced a preliminary trade agreement with Indonesia, which includes a 19% tariff on its exports to the U.S. Investors also awaited Indonesia’s central bank policy decision later in the day. Japan’s Nikkei 225 opened flat, while the Topix slipped 0.11%. Meanwhile, Asian chip stocks gained after Nvidia said it will soon resume sales of its H20 AI chips to China as export restrictions ease.
• In U.S. markets, stock futures edged lower Tuesday evening, with Dow futures down 105 points, S&P 500 futures falling nearly 0.3%, and Nasdaq 100 futures slipping 0.3%. Traders are focusing on Wednesday’s Producer Price Index (PPI) release, which will provide another key inflation gauge. On the earnings front, major banks including Bank of America (BAC), Goldman Sachs (GS), and Morgan Stanley (MS) report before the bell, along with results from Johnson & Johnson (JNJ).

Bitcoin

• Cantor Fitzgerald is reportedly set to purchase up to $3.5 billion worth of Bitcoin from Blockstream Capital, owned by Adam Back, as it plans to launch a dedicated company to hold the cryptocurrency, according to reports from the Financial Times and Bloomberg. The deal would involve around 30,000 Bitcoin, reflecting the growing institutional interest in crypto assets.
• Meanwhile, in Washington, crypto-focused legislation backed by President Trump failed to pass a key procedural vote in the House of Representatives on Tuesday, despite the administration’s public push for progress on crypto regulations. At the time of publication, Bitcoin is trading at approximately $117,804.
  Watchlist: BTC: 99,000–123,000 | ETH: 2,000–3,100 | SOL: 140–220

Forex

• The EUR/USD pair has managed to rebound from the 1.1600 level, staging a modest recovery despite broader market sentiment remaining cautious ahead of today’s release of the key U.S. Producer Price Index (PPI) inflation data. Traders are reluctant to take major directional positions before seeing whether wholesale price pressures will reinforce concerns about persistent inflation and further delay Federal Reserve rate cuts. The euro’s bounce, however, may remain limited if the data reinforces dollar strength. 
• Meanwhile, the Japanese Yen remains under pressure across the board. USD/JPY is poised to build on its recent strength, pushing beyond the 149.00 level, as bearish momentum dominates.
  Watchlist: EUR/USD: 1.1000–1.1850 | USD/JPY: 140–162

Basic Materials

• WTI crude stays weak near $65.70 in early Wednesday trading, pressured by a surprise 19.1 million barrel U.S. inventory build and easing supply fears after Trump gave Russia a 50-day deadline to end its war. Strong China Q2 GDP data may help limit further losses.
• Gold slid over 0.40% to around $3,329, as rising U.S. CPI reinforced the Fed’s hawkish stance, lifting the U.S. dollar and weighing on bullion. Traders now eye PPI, Retail Sales, and sentiment data for fresh cues.
  Watchlist: Gold: 2,600–3,500 | US Oil: 55.60–75.80

Economic Calendar (EST):

08:30 am: USD Core PPI, PPI
09:15 am: USD Industrial Production
09:15 am: USD FOMC Member Hammack Speaks
10:00 am: USD FOMC Member Barr Speaks
10:30 am: USD Crude Oil Inventories
02:00 pm: USD Beige Book
 

Earnings:

BMO (Before Market Open)
JNJ              Johnson & Johnson
BAC             Bank of America Corp.
ASML           ASML Holding N.V.
MS               Morgan Stanley
GS               Goldman Sachs Group

AMC (After Market Close): KMI, UAL, AA


The TEFS Analyst team wishes you a successful day!