Yesterday President Trump announced tariffs on 60 countries after a forced‑labour probe, while US Treasury yields surged. Headlines blamed rising oil and Gulf hostilities, but the core drivers are non‑energy inflation and Fed policy. Treasury yields climb across the curve, but short maturities have risen steadily since April, diverging from oil movements.

Long‑term yields spiked at the war’s start and then plateaued, whereas short‑term rates have been grinding higher, reflecting expectations of tighter monetary policy rather than oil volatility. Real rates on two‑year Treasuries have risen sharply, signalling a market‑anticipated tightening that could outpace inflation alone.

PCE inflation excluding food and energy rose from 2.8% last October to 3.4% in May, unemployment fell to 4.2%, and nominal wages grow over 3% annually. Oil is back at $100, amplifying the case for Fed rate hikes at the next meeting. Watch inflation expectations for signs of the Fed’s new chair, Kevin Warsh, leaking credibility.

Japanese equities offer a counterweight: tech hardware drives 21% of the Topix, with Tokyo Electron less than 12% of that sector. Despite strong recent performance, Topix trades over 20% below the S&P 500, buoyed by corporate governance reform and a potential GPIF shift to domestic assets.