Trading in two ETFs suggests inflation fears are overblown

Key Facts

Amid persistent market anticipation of inflation moves, trading in two ETFs suggests current inflation fears are overblown, according to a CNBC report. Crude oil price movements reinforce this trend, having eased bond bearish sentiment and compressed long-term bond yields. Analysts view this as potentially reducing the need for tighter monetary policy.

These signals come as recent data showed cooling inflation in major economies, such as Australia where monthly inflation fell 0.7% in May 2026 and annual inflation dropped to 4% from a forecast 4.4%, per market data. Meanwhile, the US 10-year Treasury yield dipped to 4.15% at the June 26 close, down from a monthly high of 4.35%, reflecting easing inflation expectations.

Traders now await the US Personal Consumption Expenditures (PCE) price index release next week, which could confirm or refute these signals. If crude oil moves continue to support lower yields, the bond market may see further gains, bolstering optimism over price stability. Focus also remains on Federal Reserve officials' remarks, with the recent Waller speech offering potential clues on the rate path.