Consumer prices heated up in April, the second month of the Iran war, solidifying that the Federal Reserve will hold interest rates for now and will also be on watch for higher energy costs creeping into other prices — a potential catalyst for rate hikes.

By Lucia Mutikani WASHINGTON, May 12 (Reuters) - U.S. consumer inflation increased further in April, with the annual rate posting its largest gain in three years, heightening political risks for President Donald Trump and his Republican party ahead of November's midterm elections.

The Consumer Price Index is the most commonly used measure of inflation in the United States. The CPI for all items increased by 0.9% in March 2026, on a seasonally adjusted basis, as reported by the U.

Traders have renewed bearish bets on US Treasuries, lifting expectations that the Federal Reserve will raise interest rates as oil prices and inflation push higher.

The average long-term U.S. mortgage rate rose again this week, reflecting ongoing bond market volatility as surging oil prices due to the war with Iran heighten inflation worries.

Chip stocks fell as inflation data showed energy disruptions from Iran war, boosting US yields and spurring calls for Fed rate hike in 2027. Core CPI rose to highest since '23; core gauge up sharply.

Fed Rate Cut Timing market shows a current 2.4% YES for a rate cut by June 2026, down from 3% a week ago. Fed Rate Cuts Predictions for 2026 market indicates 61.9% YES for no cuts, up from 57% yesterday.

The Morning Bull - US Market Morning Update Tuesday, May, 12 2026 US stock futures are pointing slightly lower this morning, as investors brace for April inflation data and higher borrowing costs. The consumer price index is expected at 3.