Core Viewpoint - The news highlights rising concerns over "tariff-driven inflation" in the U.S. as President Trump pushes for new tariffs on EU goods, leading to increased inflation expectations in the bond market [1][2]. Group 1: Inflation Expectations - The 5-year breakeven inflation rate rose by 4 basis points to 2.53%, the highest level since February, surpassing the 2.5% threshold considered a warning sign for inflation risks [1]. - The 10-year and 30-year breakeven inflation rates also increased, with the 10-year rate reaching 2.43% and the 30-year rate at 2.37% [1]. - Despite rising inflation expectations, nominal yields on 10-year and 30-year U.S. Treasuries fell to 4.43% and below 5%, respectively, indicating investor concerns about potential economic slowdown [1]. Group 2: Market Reactions - Following the announcement of potential tariffs, U.S. stock markets reacted mildly, with the S&P 500 index nearly flat at 6,297.36 points, close to its historical high [3]. - The Nasdaq index increased by 0.05%, marking its 11th record close of the year at 20,895.66 points, while the Dow Jones index fell by over 100 points to 44,342.19 [3]. - In the bond market, the 2-year Treasury yield dropped to 3.88%, and the 10-year yield fell to 4.421%, both reaching their lowest levels of the year [3]. Group 3: Federal Reserve Considerations - The uncertainty surrounding inflation risks and the Federal Reserve's interest rate outlook remains, with Fed Governor Christopher Waller expressing a desire to push for rate cuts in July [2]. - The key question is whether the current "tariff inflation" will be a temporary price fluctuation or evolve into long-term structural inflation pressure [2]. - Two uncertain factors could influence the Fed's decision on rate cuts: the effectiveness of stock market rebounds in stimulating consumer spending and the potential impact of Trump's immigration policies on the labor market [2].