Vivien Lou Chen

Mon, Jun 9, 2025, 1:11 PM5 min read

As traders brace for a fresh round of U.S. inflation data this week, a new twist is developing in the way some are thinking about the likely impact of tariffs and the path that major asset classes could take from here.

For Gang Hu, a trader at New York hedge fund WinShore Capital Partners, the conclusion is that stocks can still power higher no matter what this Wednesday’s consumer-price index for May shows and despite continuing uncertainty about inflation. That’s in contrast to the views held by many market participants through April 8 — when the Dow Jones Industrial Average DJIA, S&P 500 SPX and Nasdaq Composite COMP all fell to 52-week lows just three days after President Donald Trump’s 10% baseline tariff on U.S. imports from most countries took effect following months of trade uncertainty.

• ‘It might be another Apple or Microsoft’: My wife invested $100K in one stock and it exploded 1,500%. Do we sell?

• ‘The situation is extreme’: I’m 65 and leaving my estate to only one grandchild. Can the others contest my will?

• ‘I prepaid our mom’s rent for a year’: My sister is a millionaire and never helps our mother. How do I cut her out of her will?

• I bought my mother-in-law a condo — and she took out a $30,000 car loan. Now she refuses to get a roommate.

• ‘He failed in his fiduciary duty’: My brother liquidated our mother’s 401(k) for her nursing home. He claimed the rest.

One big reason for the current shift in thinking is that the full impact of tariffs is taking longer than expected to show up in the final price of goods, and it may take up to three more months for this to play out. Anecdotal information in the Federal Reserve’s Beige Book report released last week revealed that, as of May, businesses planned to pass on tariff-related costs by August.

This delayed impact from tariffs has since been factored into traders’ expectations for the core CPI inflation rate that excludes food and energy, which is seen as likely to peak on a monthly basis in August. Traders of derivatives-like instruments known as fixings are now preparing for the monthly core CPI rate to rise to just over 0.4% in August, up from 0.2% for April, according to Hu’s calculations. They expect this rate to then slide back down to below 0.2% for November and December, before inching up toward 0.3% again by next March.

However, there’s more to this than meets the eye, Hu said, and these numbers don’t mean much of anything.

“In reality, the market is as clueless as the Fed,” Hu said via phone on Monday. “The market is not currently pricing in any second inflationary impact in the form of a wage-inflation spiral, which could happen fast, and the market is not pricing in any recession impact.”