US stock futures: US stock futures, dollar dip on tariff threat

Contracts for the S&P 500 and the Nasdaq 100 fell 0.2% after Trump said he will send letters to countries setting tariff rates within the next two weeks. The dollar weakened against all of its Group-of-10 peers with the yen among the biggest gainers. Gold rose as much as 0.6% on demand for safe havens. Asian shares were mixed at the open.

Oil extended its biggest daily gain since October after the US ordered some staff to depart its Baghdad embassy and allowed military service members’ families to leave the Middle East amid rising security risks. West Texas Intermediate rose as much as 1.7% to $69.29 after jumping 4.9% Wednesday.

While it’s unclear if Trump will follow through with his pledge – the president has often set two-week deadlines for actions, only for them to come later or not at all. The comments come a day after Chinese and US officials struck a positive tone following their talks to dial down trade tensions. Amid US talking with countries including India and Japan to lower the levies, some investors see Trump’s comments as an effort to ramp up urgency in talks.

“Common sense would suggest this is another Trump strategy to increase urgency in trade negotiations,” said Rodrigo Catril, senior foreign exchange strategist at National Australia Bank Ltd. “Trump wants trade deals and he wants them sooner rather than later.”

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Stocks have steadied in recent weeks and an index of global equities is hovering near a record after recovering from their lows in April when Trump announced the highest US levies in a century in an effort to rewrite global trade. The MSCI All Country World Index hit a record Tuesday.The S&P 500 index fell 0.3% Wednesday and the Nasdaq 100 dropped 0.4% as big tech weighed on US benchmarks. Softer-than-expected US inflation supported the case for Federal Reserve rate cuts, spurring Treasuries higher. A solid $39 billion sale of 10-year debt also helped the bonds. The advance was led by shorter maturities, with two-year yields dropping below 4%. Earlier, Trump said a trade framework with China has been completed, with Beijing supplying rare earths and magnets up front and the US allowing Chinese students into its colleges and universities. The US and China will maintain tariffs at their current, lower levels following the two nations’ agreement this week in London, Trump said Wednesday.

Meanwhile, US core inflation rose in May by less than forecast, suggesting companies are largely holding back on passing higher tariff costs through to consumers.

The string of below-forecast inflation readings adds to evidence that consumers have yet to feel the pinch of tariffs — perhaps because the most punitive levies have temporarily been on pause, or thanks to companies so far absorbing the extra costs or boosting inventory. However, if higher levies set in, shielding consumers from those costs will become more difficult.

Money markets projected about two Fed reductions by the end of 2025 as traders boosted bets on a September cut to around 75%.

“I don’t see evidence in this early report of widespread price increases, but I do expect higher inflation this year as firms react to the tariffs,” said Ronald Temple, chief market strategist at Lazard Asset Management. “Ultimately, companies will have to swallow some combination of price increases to pay for higher tariffs, cost cuts to offset increased import costs, and/or lower profit margins.