US inflation came in softer than expected in April – but that hasn’t changed who’s really in charge.
That’s the assessment from Nigel Green, CEO of global financial advisory giant deVere Group, following Tuesday’s Consumer Price Index report, which shows headline inflation at 2.3% year-on-year, just below expectations of 2.4%.
Core inflation remains stubborn at 2.8%, and the monthly data shows renewed momentum: core prices rose 0.3% in April, triple the prior month’s gain.
“This is a bond market story,” says Nigel Green. “Even with the headline CPI coming in slightly softer, the core reading is sticky, and that keeps yields elevated. This is why Trump blinked on tariffs.”
The White House confirmed on Monday a deal struck in Geneva that will see US tariffs on Chinese goods drop from 145% to 30%, with China reciprocating by cutting its own duties from 125% to 10%.
“This isn’t about geopolitics — it’s about yields. Trump is trying to avoid stoking inflation further because the bond market is making the consequences crystal clear,” explains Nigel Green.
“With 10-year Treasury yields hovering near 4.5%, financial conditions are already tightening. Add aggressive tariffs into that mix and you risk tipping the economy into deeper volatility.”
Markets are now reassessing the outlook for rate cuts. While the softer headline number offers some relief, the underlying price pressures and elevated services inflation make premature easing unlikely.
“Trump is not steering markets — he’s reacting to them,” says Nigel Green.
“This presidency is being shaped by the bond market. Every move out of Washington is now filtered through the lens of how investors are likely to respond.”
The implications for portfolios are immediate. Sticky inflation and strong services pricing mean tighter financial conditions are set to persist. Growth stocks are under pressure again, while defensives and value sectors are gaining traction. The dollar remains firm, reflecting expectations that rates will stay higher for longer.
“This is why sitting in cash is dangerous,” says the deVere CEO. “You don’t wait for clarity when the environment is changing in real time. Markets move fast — and so must investors.”
deVere warns that although the April headline figure offered a brief reprieve, the persistent rise in core prices, rising energy costs, firm shelter inflation, and sticky services components all reinforce a hawkish stance in fixed income.
“Trump wants to spend more, raise tariffs, and somehow still get lower interest rates,” notes Nigel Green. “But the bond market isn’t buying it — and it’s already forcing changes to his agenda.”
The Geneva tariff deal should not be seen as a pivot to moderation, deVere stresses, but as a sign that economic realities are already shaping political decisions.
“Trump is learning quickly that the bond market doesn’t blink,” Nigel Green concludes. “And this won’t be the last time it forces his hand.
“For investors, the lesson is clear: stay diversified, stay invested, and respect the power of the market to rewrite the political script.”