Long-term bond investors are wary before the CPI release, causing the iShares 20+ Year Treasury Bond ETF (TLT) to fall two consecutive days due to inflation concerns. The median forecast for June’s CPI is a 2.7% increase, driven by tariff fears impacting consumer prices. The bond market anticipates rising yields as a result.

The market braces for tomorrow’s CPI release, expecting a notable 2.7% increase from June’s 2.4% figure. Tariff-induced price hikes, such as President Trump’s reciprocal tariffs, are expected to raise import costs and potentially lead to broader inflation. Investors are watching for specific categories showing significant price increases linked to new trade policies.

Despite the anticipation for higher CPI, a downside surprise is possible due to low consumer sentiment and potential slowing demand. The market’s fear of tariff-induced inflation may be exaggerated, with businesses potentially absorbing costs. TLT’s price near multi-year lows reflects rising Treasury yields in response to persistent inflation concerns.

The Federal Reserve is anticipated to maintain rates at the July FOMC meeting, despite inflation worries. Fed Funds futures markets show a 65% chance of a rate cut in September, indicating expectations of monetary policy easing. The interplay between short-term inflation concerns and long-term economic outlook will guide market movements post-CPI release.

Read more at Yahoo Finance: TLT Slides as Fixed-Income Investors Brace for CPI Report