The S&P 500 and the Nasdaq closed higher on Tuesday for a second straight day after softer-than-expected inflation numbers added to investor optimism from Monday when the U.S. and China announced a trade truce.

At least one official at the Federal Reserve is still skeptical about the trajectory of inflation and the economy, despite developments this week that cheered investors.

Consumer prices rose 2.3% in April compared to a year ago, cooling slightly from the previous month and defying fears of an inflation surge in the aftermath of President Donald Trump's "Liberation Day" tariffs last month. The reading -- which marked the lowest inflation rate since 2021 -- matched economists' expectations.

Risky assets were again popping on Tuesday afternoon, as markets returned to risk-on mode after April consumer-price-index report showed inflation came in cooler than expected. "The softer \[inflation\] figures are adding to confidence that the Trump policy mix won’t produce much inflation,

This week, mortgage rates are mainly driven by headlines about ongoing trade negotiations and the bond market’s reaction to tomorrow’s inflation data. On Monday, the White House announced a 90-day “reset” on steep tariffs with China,

The recent 0.2% decline in US GDP is mainly due to rising prices and import growth, though core inflation remains stable. Read what investors need to know.

Markets have welcomed the first US trade deal since Liberation Day, although the British-American agreement is hardly a game-changer for either of the two countries. The dollar is benefiting from Trump shifting to market-appeasing mode, but likely requires more positive trade developments, especially on China, to continue recovering

As the Federal Reserve holds interest rates steady in May, Fed Chair Jerome Powell stated that the risks of higher unemployment and inflation "have risen" in a press conference following the central bank's FOMC meeting.

The Federal Reserve stuck to a wait-and-see approach as officials brace for President Trump’s tariffs to stoke higher inflation and slower growth. Jerome H. Powell, the Fed chair, said that it’s “not at all clear” what the central bank should do next.

Since winning the White House, Trump has lobbied for rate cuts to come down. Since then he has flip-flopped on whether or not he will try to fire Powell, with the Fed chairman countering that it wouldn't be legal for Trump to push him out.