Jun. 10 at 6:17 PM
US CPI rose +0.5% in May, following a +0.6% increase in April but inflation data were in line w/ ests
Over the last 12 months, headline inflation has risen +4.2%, up from the +3.8% increase reported in April.
At the same time, core CPI rose +0.2% in May compared to the +0.4% increase in April. Core inflation was slightly cooler than expected, as ests were looking for a +0.3% increase
Annual core inflation rose +2.9%, up from +2.8% reported in April - inline w/ ests
--- Currently, inflation is not spiraling out of control but it is still well above the Fed's +2% target & markets are still pricing in potential rate HIKE before YE26. Further, energy fundamentals continue to deteriorate & no deal is is sight to reopen the Strait
Note: The energy index rose +3.9% last month (that is over 60% of the monthly all-items increase), following a +3.8% increase in April & a +10.9% increase in March
US unemployment rate stands at 4.3% as of the latest May 2026 - same as in April & March
Atlanta GDP for 2Q26: +3.3%
US April retail spending: Up +0.5% m/m & +4.9% y/y
Despite mounting pressure from President Trump, the macro enviro leaves the Fed w/ little room to cut rates. In fact, sticky headline numbers make a stronger case for a rate hike
However, as demonstrated during post-pandemic inflationary cycle under President Biden, further tightening may yield diminishing returns. Sustained high interest rates risk reinforcing a K-shaped outcome, where wealthy savers increased discretionary spending via high yield income, effectively blunting the Fed's efforts to cool aggregate demand - this helped sustain a higher inflation for longer IMHO
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