The announcement of impending tariffs on China, Mexico, and Canada by the White House has injected uncertainty into the markets, with potential inflationary pressures looming. These tariffs, set to take effect on February 1, are expected to increase costs for imported goods, potentially squeezing profit margins for companies reliant on these imports. This development comes as the Federal Reserve's preferred inflation gauge remains above its 2% target, suggesting that inflationary pressures could influence future monetary policy decisions. Additionally, the rise in 10-year Treasury yields to 4.55% reflects market expectations of higher future inflation or interest rates, which could lead to increased borrowing costs for businesses and consumers.
In the energy sector, oil prices have experienced volatility, briefly surpassing $73 a barrel before stabilizing. This fluctuation is attributed to the broader economic uncertainties stemming from trade policies and geopolitical developments. As of 16:24 on January 31, the price of crude oil (CL1) stands at $73.51, slightly up from its last close of $72.73, reflecting the market's cautious stance amid these evolving trade dynamics.