Kathryn Rooney Vera, macro strategist at StoneX, warns that despite softer CPI and PPI readings, the real inflation shock is still ahead. Tariffs implemented a month ago will take months to filter into consumer prices, and supply chains remain disrupted; major retailers like Walmart, Best Buy, and Amazon are already signaling increases.
She expects the 10-year Treasury yield to keep rising due to tariff-driven inflation, widening fiscal deficits, and declining foreign demand for Treasuries, with no offset from the Federal Reserve.
In housing, high mortgage rates continue to freeze inventory as two-thirds of homeowners are locked into sub-6% mortgages and won’t trade up to 7–8%, keeping prices elevated until yields fall meaningfully.
Despite negative headlines, global institutional investors are actively increasing U.S. exposure because of dollar dominance, economic flexibility, and relative strength versus Europe and Japan.
She notes that the tariff pause with China improves earnings visibility and sharply lowers recession risk, making the worst of the earnings shock likely behind us.
