Mining GFC warms up on US inflation

The US dollar was firm last night:

Yen and euro weakish:

Commodity currencies were strongish:

Brent piled it on:

Base metals yawned:

Miners bounced a little:

High yield was quiet:

Two things going on here. First, oil is still driving a commodities bid. Second, US inflation came in pretty hot on rising oil, from the Fed (chart from Calculated Risk):

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.3% (3.4% annualized rate) in April. The 16% trimmed-mean Consumer Price Index rose 0.2% (2.5% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.4% (5.0% annualized rate) in April. The CPI less food and energy rose 0.2% (2.4% annualized rate) on a seasonally adjusted basis.

That spooked equities and flogged the US bond market at thew short end as more rate hikes became de rigueur:

Looks can be deceiving. The Fed relies on CorePCE (the green line above) so it will not be spooked by these numbers. Moreover, any energy price spike will be viewed as one off and will be “looked through”. There is nothing unexpected in these numbers and the Fed will not be bringing forward any rate hikes.

We need to see more wage inflation before they move again. It was an evening of noise.