CPI today

June 10, 2022

–A friend is calling it “the Biden rally” (thanks PC).  SPX -2.4%.  Yields rose with near ED calendars posting new highs.  As EDM2 expires Monday, EDM2/EDM3 jumped 8.25 to 188.5.  It’s the same in euribor with M3/M3 190.  EDM2/EDU2 settled at a new high 93.0.  Oct FF settled 9770.5, just a few bps higher in price than they should be if the Fed hikes 50 at each of the next three meetings.  The curve flattened, with 5/30 spread down 4 bps to 10.5.  On April 21 I had marked it at -2 bps, with a subsequent rally to 27.  Markets are fragile, and the Fed’s forced pivot to inflation-fighting is adding to vulnerability. 

–Today brings the CPI report, expected 8.3% yoy, same as last, with Core 5.9 from 6.2 last. Yesterday’s Z.1 (flow of funds report from the Fed) showed Net Worth had declined slightly.  In Q1 SPX fell 5%, so far in Q2 it’s down 11%, so things aren’t exactly better.  Of course, real estate was marked higher in the report.  Which brings us to today’s U of Michigan Consumer Sentiment report.  Last was 58.4, which is nearing the lows of the Great Financial Crisis in 2008 at 55.3. 


Posted on June 10, 2022 at 5:39 am by alexmanzara · Permalink
In: Eurodollar Options

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