Hard to count on U.S. trade and inflation news

Consumer prices in the U.S. have been benign since February, and the May reading continues that trend, according to the Bureau of Labor Statistics’ consumer price index report released Wednesday. Meanwhile, the May jobs report, while better than expected, revised downward the figures for March and April, exposing some weaknesses in the labor market.

 In ordinary times, the scenario of muted inflation and a job market that’s starting to wobble would make cutting interest rates — a move that tends to boost the economy, sending prices and job openings higher — an easy decision for any central bank.

But we aren’t living in ordinary times, as CNBC’s Jeff Cox pointed out.

Global trade is still snarled by U.S. President Donald Trump’s tariffs. Even though the United States and China seem to have reached an agreement on upholding their earlier trade pact in Geneva, there’s no telling if tariff numbers will change, despite reassurances from the White House that they wouldn’t. The fact that the S&P 500 fell despite the reaffirmed framework between U.S. and China is another sign investors are growing wary of taking trade pronouncements at face value.

The volatile tariff situation also means that data since April, and for the foreseeable future, could be fuzzy. “Today’s below forecast inflation print is reassuring – but only to an extent,” said Seema Shah, chief global strategist at Principal Asset Management. “Tariff-driven price increases may not feed through to the CPI data for a few more months yet, so it is far too premature to assume that the price shock will not materialize.”

When it’s hard to rely on official communication and hard numbers, we might just have to navigate the path ahead a little blinder than usual.

S&P breaks streak and FTSE 100 hits record
U.S. stocks fell Wednesday despite positive news on trade and inflation. The S&P 500 lost 0.27% and the Nasdaq Composite retreated 0.5%, with both snapping a three-day win streak. The Dow Jones Industrial Average was flat. The pan-European Stoxx 600 shed 0.27%, but the U.K.’s FTSE 100 climbed 0.13% to close at a record level.

U.S. tariffs on China won’t change again: Lutnick
Trump said in a Truth Social post Wednesday that U.S. duties on China will total 55% — but a White House official clarified with CNBC that the figure comprises the existing 30% blanket tariffs and an additional 25% on specific products. Asked on CNBC’s “Money Movers” if the current U.S. tariffs on China are not going to shift again, Commerce Secretary Howard Lutnick replied, “You can definitely say that.”

Consumer prices in U.S. muted in May
The U.S. consumer price index for May came in at 0.1% for the month, putting the annual inflation rate at 2.4%. Economists surveyed by Dow Jones had been looking for respective readings of 0.2% and 2.4%. Excluding food and energy, the core CPI came in respectively at 0.1% and 2.8%, compared with forecasts for 0.3% and 2.9%. Following the release, U.S. Vice President JD Vance wrote on X that “the refusal by the Fed to cut rates is monetary malpractice.”

Jamie Dimon sees U.S. economy declining
The impacts of the pandemic-era government spending and monetary policy that helped support the U.S. economy have faded, and that makes the country vulnerable to a downturn in the coming months, according to JPMorgan Chase CEO Jamie Dimon. “I think there’s a chance real numbers will deteriorate soon,” Dimon said at a Morgan Stanley conference Tuesday, according to a transcript from FactSet.

Musk makes a U-turn
“I regret some of my posts about President @realDonaldTrump last week. They went too far,” Elon Musk on Wednesday wrote on X. Both men’s public feud was sparked by Musk’s opposition to Trump’s “One Big Beautiful Bill Act.” But tensions seem to have cooled. Musk appears to have deleted some of his social media posts, while Trump said Monday he was planning to retain Musk’s Starlink technology at the White House.

[PRO] Who could a ‘shadow’ Fed chair be?
Trump might already be eyeing a replacement for the chair of the Federal Reserve. That said, Jerome Powell’s term doesn’t end until May 2026, so any pick would serve as a “shadow” chair who watches over the central bank and telegraphs the moves that the White House wants regarding monetary policy. CNBC’s Jeff Cox breaks down the possible candidates and how they might influence markets.

Dollar divorce? Asia’s shift away from the U.S. dollar is picking up pace

Asia is progressively moving away from the U.S. dollar, as a mix of geopolitical uncertainties, monetary shifts and currency hedging prompt de-dollarization across the region.

Recently, the Association of Southeast Asian Nations, or ASEAN, committed to boosting the use of local currencies in trade and investment as part of its newly released Economic Community Strategic Plan for 2026 to 2030. The plan outlined efforts to reduce shocks associated with exchange rate fluctuations by promoting local currency settlements and strengthening regional payment connectivity.

Although the shift is more pronounced in Asia, the world has also been cutting its reliance on the greenback, with the share of the dollar in global foreign exchange reserves declining from over 70% in 2000 to 57.8% in 2024.