Tonight's CPI Preview: "Iran Risk Premium" Included for the First Time, Traders Ramp Up Inflation Hedge

BlockBeats News, April 10th. Tonight's release of U.S. CPI data is expected to significantly reflect the "Iran Premium" for the first time, driven by the surge in oil prices. The market expects this month's increase to hit a near four-year high, with inflation once again becoming a core variable in asset pricing.

On the bond market front, traders have proactively positioned themselves for risk hedging, significantly increasing their holdings of option positions betting on the rise in 5-year and 10-year U.S. Treasury bond yields. A JPMorgan survey shows that current sentiment in the spot market has dropped to a three-week low for net long positions.

On the macroeconomic front, robust non-farm payroll data has alleviated growth concerns, refocusing the market on the impact of energy costs. Brent crude oil has seen a cumulative increase of nearly 60% year-to-date, further strengthening expectations of upward inflation.

Interest rate expectations have tightened simultaneously. Currently, the market is only pricing in around a 30% probability of a 25-basis-point rate cut in 2026, significantly lower than the earlier expectations of multiple rate cuts at the beginning of the year.

Institutional views believe that with the combination of resilient employment and rising energy prices, the downside potential for short-term interest rates is limited. If the CPI confirms the path of inflation resurgence, the "later and fewer" rate cut expectations will be further reinforced.