The US Treasury curve initially bull-steepened following CPI data that were broadly consistent with expectations, but the move largely retraced by the end of the session. Headline CPI matched consensus at 0.3% m/m (s.a.), while core CPI printed marginally below expectations at 0.2% m/m (s.a.) against the 0.3% consensus. A 1.1% m/m decline in used-car prices was the largest negative contributor to the monthly change. On the upside, food prices rose 0.7% m/m, a notable acceleration, and shelter costs increased a moderate 0.4% m/m after several months of comparatively subdued gains.

Overall, these inflation readings are unlikely to materially alter market narratives. Inflation is likely to remain a secondary consideration, behind Fed independence and labour market dynamics, in shaping the near-term trajectory for USD rates. A more durable inflation impulse would likely require a broader commodity upswing extending into energy and agricultural (“soft”) commodities. In this context, developments in oil and copper prices bear monitoring.

At the front end, markets continue to price a full policy rate cut only in June. This may in part reflect expectations around leadership timing, with Chair Powell’s term ending in May. Near term, attention is likely to pivot to the Supreme Court’s ruling on the IEEPA tariff framework. A negative decision would increase the probability of a response via reciprocal duties, potentially in the 10–15% range. Given that this risk has been well telegraphed, a pronounced immediate market reaction is not expected. However, incremental fiscal and term-premium concerns could still bias the long end of the Treasury curve modestly higher.