CPI Is In, Bonds React: Wealthion Macro Bites 9/11/25

CPI numbers are in for August and they saw consumers paying more for a variety goods and services and more than expected. That coupled with higher than expected jobless claims and the Fed Reserve meeting for next week is primed for a potential interest rate cut.

The consumer price index posted a seasonally adjusted 0.4% increase, double July and making the annual inflate rate now 2.9%. Economist had thought the numbers would be 0.3% and 2.9% . As a result we saw the 10-year U.S. Treasury yield fall Thursday morning. The yield was 3 basis points lower, landing at 4.002% as of 8:50am. Thursday morning as investors assessed the latest inflation data, as well as a jump in jobless claims.

Mexico is raising tariffs on autos from China and other Asian countries to 50% (from 20%) to protect local jobs.  Additionally, tariffs on steel, toys and motorcycles will be lifted to 35% and those on textiles to between 10% and 50%.  The Economy Ministry said increased tariffs will impact $52B of imports and noted, “Without a certain level of protection, you almost can’t compete.”  As China looks to offload goods subject to U.S. tariffs in other countries, there will be a global push to resist this imported deflation.

With whiffs of GFC-type reckoning, Texas subprime car lender Tricolor Holdings filed for bankruptcy and plans to liquidate.  The collapse of Tricolor is raising concerns that pain in the multibillion-dollar market for bundled auto loans is starting to mount as a result of lax lending standards and absence of safeguards.  Sound familiar?

August PPI slowed to +2.6% y/y from a downwardly revised +3.1% in July (from +3.3%) and below estimates of +3.3%. The 6-month annualized rate declined to +1.2%, with much of this increase due to the single month of July when prices jumped 0.7% m/m.