CNBC Daily Open: Good news on U.S. trade and inflation isn't lifting markets

Consumer prices in the U.S. have been benign since February, and the May reading continues that trend, according to the Bureau of Labor Statistics' consumer price index report released Wednesday. Meanwhile, the May jobs report, while better than expected, revised downward the figures for March and April, exposing some weaknesses in the labor market.

 In ordinary times, the scenario of muted inflation and a job market that's starting to wobble would make cutting interest rates — a move that tends to boost the economy, sending prices and job openings higher — an easy decision for any central bank.

But we aren't living in ordinary times, as CNBC's Jeff Cox pointed out.

Global trade is still snarled by U.S. President Donald Trump's tariffs. Even though the United States and China seem to have reached an agreement on upholding their earlier trade pact in Geneva, there's no telling if tariff numbers will change, despite reassurances from the White House that they wouldn't. Besides, the current 55% tariff rate is still too heavy to bear for many U.S. importers. The fact that the S&P 500 fell despite the reaffirmed framework between U.S. and China is another sign investors are growing wary of taking trade pronouncements at face value.

The volatile tariff situation also means that data since April, and for the foreseeable future, could be fuzzy. "Today's below forecast inflation print is reassuring – but only to an extent," said Seema Shah, chief global strategist at Principal Asset Management. "Tariff-driven price increases may not feed through to the CPI data for a few more months yet, so it is far too premature to assume that the price shock will not materialize."

When it's hard to rely on official communication and hard numbers, the U.S. Federal Reserve — and investors everywhere — have to navigate the path ahead a little blinder than usual.

S&P breaks streak while Kospi extends gains
U.S. stocks fell Wednesday despite positive news on trade and inflation. The S&P 500 lost 0.27% and the Nasdaq Composite retreated 0.5%, with both snapping a three-day win streak. The Dow Jones Industrial Average was flat. Asia-Pacific markets were mostly down Thursday. Japan's Nikkei 225 slid 0.61% at 1:20 p.m. Singapore time, but South Korea's Kospi added 0.68%, on track for a seven-day winning streak.

Potential extension on tariff pause
U.S. Treasury Secretary Scott Bessent said Wednesday the Trump administration is open to extending the 90-day tariff pause beyond July 9 for the U.S.′ top trading partners, as long as they show "good faith" in ongoing trade negotiations. The White House is "working toward deals" with 18 "important trading partners," Bessent said in a congressional hearing.

U.S. tariffs on China won't change again: Lutnick
Trump said in a Truth Social post Wednesday that U.S. duties on China will total 55% — but a White House official clarified with CNBC that the figure comprises the existing 30% blanket tariffs and an additional 25% on specific products. Asked on CNBC's "Money Movers" if the current U.S. tariffs on China are not going to shift again, Commerce Secretary Howard Lutnick replied, "You can definitely say that."

Budget deficit in the U.S. growing
The U.S. government debt in May was $316 billion, reversing a surplus in April from tax season receipts. Year-to-date deficit ballooned to $1.36 trillion, 14% higher than a year ago, though the May 2025 total was 9% less than the May 2024 shortfall. Surging financing costs were again a major contributor to fiscal issues, with interest on the $36.2 trillion debt topping $92 billion.

Consumer prices in U.S. muted in May
The U.S. consumer price index for May came in at 0.1% for the month, putting the annual inflation rate at 2.4%. Economists surveyed by Dow Jones had been looking for respective readings of 0.2% and 2.4%. Excluding food and energy, the core CPI was 0.1% and 2.8% respectively, compared with forecasts for 0.3% and 2.9%. Following the release, U.S. Vice President JD Vance wrote on X that "the refusal by the Fed to cut rates is monetary malpractice."

Jamie Dimon sees U.S. economy declining
The impacts of the pandemic-era government spending and monetary policy that helped support the U.S. economy have faded, and that makes the country vulnerable to a downturn in the coming months, according to JPMorgan Chase CEO Jamie Dimon. "I think there's a chance real numbers will deteriorate soon," Dimon said at a Morgan Stanley conference Tuesday, according to a transcript from FactSet.

[PRO] Who could a 'shadow' Fed chair be?
Trump may already be eyeing a replacement for the chair of the Fed. That said, Jerome Powell's term doesn't end until May 2026, so any pick would serve as a "shadow" chair who watches over the central bank and telegraphs the moves that the White House wants regarding monetary policy. CNBC's Jeff Cox breaks down the possible candidates and how they might influence markets.

China’s racing to build its AI ecosystem as U.S. tech curbs bite. Here’s how its supply chain stacks up

Beijing has mobilized tens of billions of dollars to counter the U.S.' curbs on its purchase of advanced semiconductors used in artificial intelligence development. While China has been able to "brute force" its way into some breakthroughs, it still has a long way to go, according to experts. 

The task has been made more challenging by the fact that U.S. curbs not only restrict China's access to the world's most advanced chips, but also technology vital for creating an AI chip ecosystem.

Those constraints span the entire semiconductor value chain, ranging from design and manufacturing equipment used to produce AI chips to supporting elements such as memory chips.