Inflation print calms markets, but tariffs still loom

Commerce Secretary Howard Lutnick said tariffs are “worth it” even if they plunge the US economy into recession territory

article-image

US Secretary of Commerce Howard Lutnick | Joshua Sukoff/Shutterstock modified by Blockworks

share


This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.


After a tough several weeks, today is a happier day on Wall Street. 

February’s inflation print gave stocks a surprising but welcome boost this morning after prices last month rose less than expected. 

The Consumer Price Index showed prices increased 2.8% year over year — still above the Fed’s 2% target but a decline from the 3% annual increase recorded in January. Economists had projected CPI to come in at 2.9% for the 12 months ended February. 

Month over month, consumer prices were up 0.2% in February, a decline from January’s 0.5% gain. That was just under projections, which called for a 0.3% rise last month. Core CPI (excludes volatile food and energy prices) came in at 3.1% annually last month, the lowest yearly increase in almost four years. 

A key sector pushing inflation lower is housing, which historically tends to be one of the more stubborn components of the print. Easing housing costs have significantly contributed to the slowdown in inflation for the past two years.

Non-housing costs, on the other hand, have eased less consistently. While Core inflation is slowing for now, this sector includes goods likely to be impacted by tariffs. Food and energy costs are also expected to rise, especially given Trump’s new tariff plans for steel and aluminum, which experts say will increase OCTG costs by 15% annually.

US equities rallied Wednesday morning on the inflation print. The S&P 500 gained as much as 0.8% while the Nasdaq Composite surged almost 1.5% early in the session. At 2 pm ET they were trading 0.4% and 0.9% higher, respectively. 

Still, fears over an escalating trade war are weighing on markets. By our estimate, the “tariff trade” is the dominant factor contributing to US equity prices right now, even if a positive inflation print provides short-term relief. 

So far, the Fed seems comfortable continuing its interest rate cut pause. Powell last week said the economy is “fine.” 

“It doesn’t need us to do anything,” he added. 

The latest on the tariff front is more retaliatory efforts against the US. Canada hit the US with a 25% levy on steel while the EU announced additional duties on items including denim, bourbon and poultry. 

Companies are faced with two options: Take the loss or charge higher prices. Although if you ask Karoline Leavitt, the latter is out of the question. We’ve written before about how US firms increased their inventories at the start of the year. So it could take some time to see higher prices reflected on consumers, should companies go that route at all. 

Donald Trump has warned Americans of “short-term pain” but has so far refrained from saying just how high the administration’s pain threshold is. We’ve seen cabinet members attempt what I can only describe as damage control in the past, but today they took a different approach entirely. 

Commerce Secretary Howard Lutnick this morning said tariffs are “worth it” even if they plunge the US economy into recession territory. I guess their pain threshold is pretty high. Sounds like a “Trump put” is out of the question.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (1).jpg

Research

As AI supercharges surveillance, privacy becomes a prerequisite and the winning stack will combine confidentiality with selective disclosure. Zcash’s Tachyon, composable standards on Ethereum/Solana, and compliance-aware pools aim to make private rails the new norm.

article-image

Bain Capital Crypto and Haun Ventures co-led the round as demand grows for Bitcoin-denominated savings and annuities

by Blockworks /
article-image

NYSE owner’s investment values the prediction market at $8–9 billion, signaling Wall Street’s entry into event-based trading

by Blockworks /
article-image

Pineapple begins deploying its $100 million Injective Digital Asset Treasury, staking INJ to earn yield and fund onchain mortgage ambitions

by Blockworks /
article-image

Staking levels in the ether funds will depend on protocol unstaking queue times and anticipated redemption activity, firm says

article-image

ETF inflows, miner strength, and tightening supply drive Bitcoin past its prior peak amid renewed demand for scarce assets

by Blockworks /
article-image

The Guidestar team, led by Alex Nezlobin, will join Uniswap Labs to enhance automated market maker design and smart order routing

by Blockworks /