Core Viewpoint - The article discusses the overall cooling of inflation in the U.S. as of March 2025, highlighting a decrease in CPI and core CPI, alongside rising market concerns regarding economic uncertainty and trade tensions, which have led to a risk-off sentiment in the market [1][2][3][4]. Inflation Data Summary - The CPI year-on-year decreased to 2.4% from 2.8%, with a month-on-month change of -0.1% [1][5][6]. - Core CPI year-on-year was 2.8%, down from 3.1%, with a month-on-month change of 0.1% [1][9]. - The Cleveland Fed's Trimmed Mean CPI for March was 3.0%, lower than the previous 3.07% [9]. - The Atlanta Fed's Sticky CPI year-on-year was 3.28%, also down from 3.50% [9]. Market Reactions - The data increased the probability of interest rate cuts, with Bloomberg's implied June rate cut expectation rising to 100% from 81.5% [2][12]. - Following the data release, the 10-year U.S. Treasury yield rose by 9 basis points to 4.43%, while major stock indices experienced declines, with the Nasdaq down 4.3% [2][12]. Risk-Off Sentiment Factors - One reason for the risk-off sentiment is the Federal Reserve's concerns about economic weakness and inflation rebound risks due to tariffs, leading to a cautious decision-making environment [2][13]. - Another factor is the ongoing escalation of trade tensions, with the White House announcing a total tariff of 145% on China, causing the VIX index to rise to 40.7 [3][16]. - Additionally, the recent significant rise in U.S. Treasury yields, with the 10-year yield increasing by 47 basis points to 4.46%, has contributed to market unease [4][17]. Fiscal Policy Context - The U.S. House passed a revised budget resolution for FY 2025, allowing for a potential increase in the deficit by up to $5.8 trillion before FY 2034, raising concerns about fiscal sustainability [4][18][19]. - The budget resolution includes provisions for significant tax cuts, which could further complicate the fiscal landscape [18][19].

Core Viewpoint - The overall inflation data in the US for February 2025 shows a cooling trend, with CPI year-on-year dropping to 2.8% from 3% in the previous month, and core CPI decreasing to 3.1% from 3.3% [1][5][7] Inflation Data Summary - February CPI year-on-year decreased to 2.8%, with a month-on-month increase of 0.2%, compared to 0.5% in January [1][5] - Core CPI year-on-year fell to 3.1%, with a month-on-month increase of 0.2%, down from 0.4% [1][7] - Seasonal effects from January led to overestimated price increases for certain goods and services, which are expected to reverse in subsequent data [1][8] Housing Price Trends - The growth rate of housing prices has slowed, with a month-on-month increase of 0.3% in February, down from 0.4% in January [2][9] - Owner's Equivalent Rent (OER) and primary residence rent both stabilized at a month-on-month increase of 0.3% [2][9] - New tenant lease prices have turned negative year-on-year, indicating a low probability of rebound in primary residence rent [10] Supercore Inflation Insights - Supercore inflation (excluding housing) showed a month-on-month increase of 0.22%, significantly lower than the previous value of 0.76% [2][10] - Major contributors to this slowdown include declines in airfares and auto insurance prices [2][10] Core Goods Price Movements - Core goods prices increased by 0.2% month-on-month in February, down from 0.3% in January [3][11] - Used car and truck prices fell to 0.9% from 2.2%, reflecting the fading effects of January's price spikes due to California wildfires [3][11] Federal Reserve's Monetary Policy Outlook - Based on February CPI data, the Cleveland Fed anticipates core PCE to show a month-on-month increase of 0.2% and a year-on-year increase of 2.6% [3][12] - Fed Chair Powell indicated that the Fed is not in a hurry to adjust policies in response to short-term data fluctuations, maintaining a dovish stance [3][12][13] Market Reactions - Following the release of employment and inflation data, risk-off sentiment in overseas markets eased, leading to a slight recovery in US stock indices [4][15] - The Nasdaq index rose by 1.22%, driven by the technology sector, while the S&P 500 increased by 0.49% [4][15]