Concerns about inflation still dominate this market. In April and May, the immediate concern was that the Trump administration's tariff policy would cause a sharp spike in inflation. That hasn’t been the case, although some companies, particularly retailers, continue to report tariff headwinds.
However, the current concerns about inflation center around interest rates. The CME FedWatch tool puts the chance of a 25-basis point rate cut in September at around 87%. However, lower interest rates have a stimulative effect on the economy. That means that inflation will almost certainly increase, including for commodities like oil that have been in check so far in 2025.
