US CPI hits lowest level since 2021 as Japan sticks to interest rate hike plan

• Dow Jones falls as UnitedHealth falls
• US CPI inflation hits lowest since 2021
• Market bets on interest rate cut only in September

Investors were digesting April's Consumer Price Index (CPI) data and assessing developments from the recent U.S.-China trade deal.

The negative highlight was the Dow Jones Industrial Average, which fell 0,4%, mainly driven by the sharp drop in UnitedHealth shares. The company's stock, considered one of the pillars of the index, registered a sharp decline and was one of the main drivers of negative pressure.

The S&P 500, in turn, operated close to stability. The index rose 3,3% in the previous session with optimism generated by the tariff relief between the two largest economies in the world. Meanwhile, the Nasdaq Composite, driven by big tech, rose around 0,3%, reflecting the appetite for technology stocks.

The CPI released on Tuesday showed a slowdown in inflation, with the annual rate reaching its lowest level since 2021. The data signals that, at least in the short term, the impacts of the tariff measures recently implemented by Donald Trump have not yet materialized in consumer prices.

Despite this, the bond market remains attentive to inflation behavior, with investors speculating about the Federal Reserve's next steps. Most bets now project the first 0,25 percentage point cut in the base rate only for September, postponing expectations that previously indicated June as the likely start of the monetary easing cycle.

The trade truce between Washington and Beijing, although it generated initial euphoria, is losing strength as investors return their focus to economic indicators and the Fed's positioning.

Bank of Japan maintains firm stance on interest rates despite global uncertainty

The Bank of Japan (BOJ) has indicated that it will continue its policy of gradually raising interest rates, even in the face of uncertainty caused by US trade tariffs. Deputy Governor Shinichi Uchida said wages and prices in Japan are expected to continue rising, driven by a buoyant labor market.

Despite the base rate being kept at 0,5% at the last meeting, board members signaled that there is room to resume increases after a possible pause. The 2% inflation target remains the central justification for this trajectory. Uchida emphasized that companies should pass on rising costs to consumers, which would sustain inflation.

Meanwhile, Finance Minister Katsunobu Kato plans to discuss exchange rate policies with the US Treasury Secretary during the G7 meeting, making clear that such talks will not be part of formal trade negotiations.