US May CPI +8.6% y/y vs 8.3% expected

  • Priority was 8.3% y/y
  • m/m reading +1.0% vs +0.7% expected and 0.3% prior
  • CPI index at 292.296 vs 291.661 prior
  • Full report

Core CPI:

  • y/y 6.0% vs 5.9% expected and 6.2% prior
  • m/m +0.6% vs +0.5% expected and +0.6% prior

Details:

  • CPI energy +3.9% vs -2.7% prior
  • Gasoline +4.1% vs -6.1% prior
  • New vehicles +1.0% vs. +1.1% prior
  • Used vehicles +1.8% vs -0.4% m/m prior
  • Owners’ equivalent rent +0.6% m/m vs +0.5% prior
  • Food +1.2% vs. +0.9% prior
  • Real weekly earnings -0.7% m/m

I suspect much of the risk-averse price action on Thursday was related to jitters ahead of this report but those jitters were confirmed. This is a terrible report with inflation rising 1.0% in the month in a broad-based way.

Ahead of the report, the Fed funds future

Futures

Futures or a futures contract represents a legal agreement to buy or sell a security or asset at a predetermined price at a specified time in the future. Of note, the parties are not known to each other. These transactions usually involve commodities or other securities involving the buying and selling for a forward or predetermined price. Futures also adhere to a delivery date, which specifies the date of delivery and payment. Relative to other forms of investing futures are much more complex, as they involve specified and non-flexible parameters.Futures Trading ExplainedFutures contracts are negotiated at exchanges that act as a unified marketplace for both buyers and sellers. Buyers of contracts represent long position holders, while selling parties constitute short position holders. Both parties risk their counterparty walking away if the price goes against them. As such, the contract can involve both parties incurring a margin of the value of the contract with a mutually trusted third party. This margin can range substantially, depending on the current volatility of the market of the security being traded. Futures can be incredibly risky and are the textbook definition of market speculation. A trader who predicts that the price of an asset will move in a certain direction can contract to buy or sell it in the future at a price. If the prediction is incorrect there will be losses. Futures trading is considered an advanced type of trading that requires prior knowledge and understanding. For this reason, retail traders will seldom be afforded access to futures trading by brokers without first undergoing specific questions or account requirements.

Futures or a futures contract represents a legal agreement to buy or sell a security or asset at a predetermined price at a specified time in the future. Of note, the parties are not known to each other. These transactions usually involve commodities or other securities involving the buying and selling for a forward or predetermined price. Futures also adhere to a delivery date, which specifies the date of delivery and payment. Relative to other forms of investing futures are much more complex, as they involve specified and non-flexible parameters.Futures Trading ExplainedFutures contracts are negotiated at exchanges that act as a unified marketplace for both buyers and sellers. Buyers of contracts represent long position holders, while selling parties constitute short position holders. Both parties risk their counterparty walking away if the price goes against them. As such, the contract can involve both parties incurring a margin of the value of the contract with a mutually trusted third party. This margin can range substantially, depending on the current volatility of the market of the security being traded. Futures can be incredibly risky and are the textbook definition of market speculation. A trader who predicts that the price of an asset will move in a certain direction can contract to buy or sell it in the future at a price. If the prediction is incorrect there will be losses. Futures trading is considered an advanced type of trading that requires prior knowledge and understanding. For this reason, retail traders will seldom be afforded access to futures trading by brokers without first undergoing specific questions or account requirements.
Read this Term
market was largely pricing in a path of 50/50/50/25 at the four upcoming meetings, starting with the June 15 get-together. The odds of a fourth 50 bps hike in November are now at 36% and the terminal rate at year end is just shy of 3.00%.

Right now, that pricing is tough to lean against. This is the last big data point before next week’s FOMC and Powell can’t come out and try to slow roll 8.3% inflation that’s increasing at 1% a month. US gasoline prices hit a new high yesterday so there’s more in the pipeline, even if that’s out of the FOMC’s control.

Stock futures have fallen sharply on this report (SPX -46) and the US dollar is higher with EUR/USD falling through 1.0550.

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