A fourth month of surprisingly benign US inflation drove bond yields down, with Wall Street investors seeing greater leeway for the Federal Reserve to cut rates should trade frictions slow the economy. Treasuries extended gains after a solid $39 billion sale of 10-year debt. Stocks rose. The dollar fell.The advance in bonds was led by shorter maturities, with two-year yields dropping below 4%. Money markets projected about two Fed reductions by the end of 2025. While the central bank’s next move is fully priced in for October, traders boosted bets on a September cut to around 75%. The S&P 500 is now about 1.5% away from its all-time high.Wall Street parses inflation data.The consumer price index, excluding the often volatile food and energy categories, increased 0.1% from April. From a year ago, it rose 2.8%. The below-forecast reading added to evidence consumers have yet to feel the pinch of tariffs — perhaps because the most punitive levies have temporarily been on pause, or thanks to companies absorbing the extra costs or boosting inventory.“The tariffs aren’t filtering through to Main Street as feared,” said David Russell at TradeStation. “This is good news for the White House, Wall Street and Jerome Powell. The Fed’s tone could soften next week because we’ve probably seen peak hawkishness, especially with other central banks cutting.”Following the report, President Donald Trump reiterated his call for the Fed to lower interest rates by “one full point.” “Would pay much less interest on debt coming due. So important!!!” he posted on Truth Social.Investors also kept a close eye on tariff developments. Trump said a framework with China has been completed, with Beijing supplying rare earths and magnets “UP FRONT” and the Washington allowing Chinese students into its universities. The US and China will maintain tariffs at their current, lower levels following negotiations, Trump said.Meantime, Commerce Secretary Howard Lutnick said the European Union is likely to be among the last deals that the US completes, as the administration rushes to secure tariff agreements with other trading partners.US Markets Today: S&P 500, Dow Jones Rise As US-China Trade Talks Progress“With lower-than-expected numbers across the board and a trade deal with China that was agreed to in London, the narrative around tariff-induced inflation should subside,” said Chris Zaccarelli at Northlight Asset Management. “However, CPI remains above 2% and even though the tariff rates are going to be less than originally feared, after they are implemented they will further increase the cost of goods.” Because of this and the tariff pause that’s scheduled to be lifted next month, Zaccarelli notes he’s still cautious, but many of the risks that were present in early April, appear to be receding at this time.Given the limited pass-through to inflation so far, a steady labor market and continued uncertainty surrounding Trump’s policies, the Fed is widely expected to keep interest rates on hold at next week’s meeting. Nonetheless, with inflation cooling along with the labor market, officials may face more pressure to lower borrowing costs soon.“It’s far too early to call tariffs an inflation non-event,” said Ronald Temple at Lazard. “Ultimately, companies will have to swallow some combination of price increases to pay for higher tariffs, cost cuts to offset increased import costs, and/or lower profit margins. I don’t see evidence in this early report of widespread price increases, but I do expect higher inflation this year as firms react to the tariffs.”To Bret Kenwell at eToro, while the latest inflation report didn’t come in hot, CPI hasn’t made a lot of progress lately. Looking forward, investors should pay close attention to the Fed next week, he said.“So far, Chair Powell has walked a tightrope when it comes to monetary policy,” Kenwell noted. “While Powell doesn’t give many clues on future Fed decisions, and does a good job not to tip his hand, investors crave certainty and will be looking for some answers during next week’s Fed press conference.”Corporate Highlights:Tesla Inc. climbed as Elon Musk said he regretted some of his posts about President Trump last week. Wedbush’s Dan Ives said it’s an “important step.”Shares of several American steelmakers fell after the US and Mexico closed in on a deal to remove tariffs on some imports of the metal, prompting speculation that other nations could also get concessions.The Air Force has cut in half its request to Congress for its signature F-35s, dealing a blow to Lockheed Martin Corp., the top US defense contractor.Trump’s nominee to lead the Federal Aviation Administration vowed to hold Boeing Co. accountable for the quality of its jets as the US planemaker works to produce its cash cow 737 Max aircraft at higher rates.Separately, Royal Air Maroc is in the final stages of a major order from Boeing and a smaller deal for Airbus SE jets as part of the North African carrier’s expansion plans, according to people familiar with the matter.Bank of America Corp. Chief Executive Officer Brian Moynihan said investment-banking fees will likely drop about 25% in the second quarter as Trump’s policy announcements continue to chill dealmaking.Nvidia Corp. Chief Executive Officer Jensen Huang said Wednesday that quantum computing is reaching an inflection point and will be powerful enough in the coming years to help “solve some interesting problems” globally.General Motors Co. plans to invest $4 billion in its US plants over the next two years in response to President Donald Trump’s tariffs in a move that reduces production in Mexico while boosting domestic output of some of its some of its top-selling gas-powered vehicles.Pet-food company Chewy Inc.’s gross margin and free cash flow fell short of expectations, as did its reiterated annual sales target. Analyst said the report wasn’t strong enough to justify recent strength in the shares.Victoria’s Secret & Co. projected profit for the current quarter that trailed Wall Street’s expectations — a hit to the fledging turnaround being led by a chief executive officer in her first year.General Mills Inc. is considering selling its Häagen-Dazs ice-cream stores in China, according to people familiar with the situation, as the US food company faces challenges with sales in the country.Some of the main moves in markets:StocksThe S&P 500 rose 0.2% as of 1:04 p.m. New York timeThe Nasdaq 100 rose 0.2%The Dow Jones Industrial Average rose 0.4%The MSCI World Index rose 0.2%Bloomberg Magnificent 7 Total Return Index was little changedThe Russell 2000 Index rose 0.3%CurrenciesThe Bloomberg Dollar Spot Index fell 0.4%The euro rose 0.6% to $1.1493The British pound rose 0.4% to $1.3552The Japanese yen rose 0.2% to 144.58 per dollarCryptocurrenciesBitcoin fell 0.5% to $109,470.28Ether rose 2.7% to $2,850.38BondsThe yield on 10-year Treasuries declined five basis points to 4.42%Germany’s 10-year yield advanced one basis point to 2.53%Britain’s 10-year yield advanced one basis point to 4.55%CommoditiesWest Texas Intermediate crude rose 2.6% to $66.64 a barrelSpot gold rose 0.2% to $3,330.66 an ounceStock Market Today: All You Need To Know Going Into Trade On June 11. 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