[ad_1]
\n<\/p>\n
U.S. Treasury yields ticked higher after the inflation report. The 10-year yield rose 4 basis points to 4.328%, while the 2-year yield climbed over 5 basis points to 3.999%. Lower-than-expected inflation figures tempered stagflation fears but did not prompt an immediate shift in Fed policy expectations.<\/p>\n
Trade policy remains a headwind, with Trump\u2019s 25% steel and aluminum tariffs taking effect Wednesday. The European Union announced retaliatory tariffs on $28.3 billion worth of U.S. imports, starting in April. Meanwhile, Canada\u2019s proposed 25% electricity levy on U.S. exports led to threats of higher tariffs, though both sides softened their stance.<\/p>\n
While the softer inflation reading provides temporary relief, it may not be enough to sustain a prolonged rally. The market remains under pressure from multiple fronts\u2014rising Treasury yields, ongoing trade tensions, and uncertainty over Fed policy. The S&P 500\u2019s approach to correction territory signals broader fragility, and tech stocks remain vulnerable after recent heavy selling.<\/p>\n
Additionally, the Fed is unlikely to pivot to rate cuts quickly, especially with core CPI still above the 2% target. Without a clear signal of policy easing or economic acceleration, traders may use this bounce as an opportunity to reduce risk rather than chase a sustained move higher.<\/p>\n
Further downside risks include a potential escalation in trade disputes and upcoming economic data that could reignite inflation fears. Traders should watch Thursday\u2019s producer price index (PPI) closely, as any upside surprise could reverse today\u2019s relief rally. For now, the bounce looks more like a reflexive rebound than the start of a meaningful recovery.<\/p>\n