From Yahoo Finance: 2025-05-12 09:52:00

Investors are scaling back expectations for Federal Reserve rate cuts after the delay of harsh tariffs in the U.S.-China trade war. A rate reduction may not happen until September, with only a half-point cut expected by year’s end. This shift is reflected in rising bond yields and higher stock futures.

The dollar is also on the rise following the tariff announcement, which could help keep inflation in check. Expectations for a quarter-point cut at the Fed’s June meeting and two more cuts this year have shifted after the U.S. and China agreed to limit tariff increases for 90 days.

The U.S. reducing tariffs from 145% to 30% on Chinese imports has eased concerns of goods shortages and inflation spikes, according to analysts from Citi. This move allows the Fed to take a more patient approach.

Read more: Markets pare bets on Fed rate cuts following U.S.-China tariff delay