Inflation data, trade talks in focus: What to watch this week

Sun, May 11, 2025, 7:14 AM 6 min read

Stocks ended last week slightly down after Federal Reserve Chair Jerome Powell reiterated the central bank's wait-and-see approach to interest rate policy and President Trump unveiled a trade deal between the US and UK.

All three major indexes finished last week in the red, as trade volatility moved stock charts. The S&P 500 (^GSPC) sank about 0.5%, while the Dow Jones Industrial Average (^DJI) slipped roughly 0.2% and the Nasdaq Composite (^IXIC) gave up about 0.3%.

The week ahead will bring a fresh update on inflation, with the release of the Consumer Price Index (CPI) on Tuesday, as well as the Producer Price Index (PPI) on Thursday. Retail sales will offer a read on the health of the American consumer. And investors will also be on the lookout for advancing trade deals, following a limited, bilateral pact with the UK.

China, the nation's third-largest trading partner, is also top of mind. US officials, including Treasury Secretary Scott Bessent huddled with Chinese officials this past weekend in Geneva, with the aim of de-escalating tensions and coming to some preliminary understanding. On Friday President Trump floated the idea of slashing China tariffs to 80%. Such an overture might invite Beijing to react with a tariff reduction of their own.

New inflation data coming this week will offer investors the latest look at pricing pressures.

The readings carry significance because they will be among the first bits of "hard" economic data that captures, at least in part, the time period since Trump imposed heavy tariffs on the country's trading partners. Should the data show heightened pressures, it will bolster the case that the costs of a high-tariff regime are being born by American consumers, sapping their purchasing power. Producer prices can also offer a look at inflation before those costs hit consumers, revealing where prices are heading.

Analysts surveyed by Bloomberg expect the Consumer Price Index (CPI) to increase 0.3% for the month of April compared to the prior month. In March, headline prices fell from the prior month for the first time since 2020. On a "core" basis, which strips out the more volatile costs of food and gas, prices are expected to climb 0.3% over the prior month and 2.8% compared to the same period last year.

The Federal Reserve will be watching inflation data alongside the rest of us.

Last week, policymakers at the central bank voted to keep rates where they are, citing the need for more data — and time — to understand the impacts of the tariffs, which are also still in flux.