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Market Minute: Rising inflation expectations could send yields higher today

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The New York Federal Reserve’s Survey of Consumer Expectations, which we believe the Federal Reserve favors when it comes to making policy, will be published this morning.

Following the move in the University of Michigan’s one-year expectations metric to 6.7% and the one-year measure to 4.4%, this normally second-order data carries the risk of sending yields higher across the curve.

When the effective tariff rate rises to 25%, inflation becomes sustained when other countries retaliate and consumers expect higher prices.

While the Federal Reserve in the near term may need to focus on a short-term stabilization program to increase liquidity and restore financial stability, it will in equal measure keep an eye on the evolution of inflation expectations.

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About Joseph Brusuelas

@JoeBrusuelas

Joe Brusuelas, “chief economist to the middle market,” is the preeminent voice championing issues and policies facing midsize companies in the United States and around the world. An award-winning economist, Brusuelas has more than 20 years’ experience analyzing U.S. monetary policy, labor markets, fiscal policy, international finance, economic indicators and the condition of the U.S. consumer.

A member of the Wall Street Journal’s forecasting panel and the UCLA Anderson School of Management's Board of Directors, Brusuelas regularly briefs members of Congress and other senior officials regarding the impacts of federal policy on the middle market and the factors by which middle market executives make business decisions. He also frequently offers his insights on the U.S., Canadian and global economies in the financial media. In 2020, he was named one of the 100 most influential economists by Richtopia. In December 2023, Brusuelas and the economics team were recognized on Bloomberg's list of Best Bond Forecasters after correctly predicting where the benchmark Treasury would end the year.

Before joining RSM in 2014, Brusuelas spent four years as a senior economist at Bloomberg L.P. and the Bloomberg Briefs newsletter group, where he co-founded the award-winning Bloomberg Economic Brief. Earlier in his career, he was a director at Moody's Analytics covering the U.S. and global economies for the Dismal Scientist website. He also served as chief economist at Merk Investments L.L.C. and chief U.S. economist at IDEAglobal.

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