DXY is still threatening, but an ECB hike gave the world relief.
AUD popped back into the .70s.
Oil sank; gold got an ECB lift as it sat on DXY.
AI metals likewise.
Big miners still look ugly.
EM is toppy.
Junk calm for the bulls.
Yields followed oil rather than hot US inflation.
Rebound!
So, the ECB hiked, but US inflation was more interesting for the future. It was not pretty.
In May, the core CPI grew by 0.21%, which was less than the consensus estimate.
Based on information from the CPI report, we calculate that the Dallas Fed’s trimmed-mean PCE increased by 0.23% and the core PCE price index increased by 0.28% in May, representing a year-over-year rate of +3.34%.
We are hot-headed for a Ukraine War rerun. And the PPI was worse again.
While their growth rates for April were revised downward, the producer pricing index (PPI) and PPI excluding food, energy, and trade services climbed more than anticipated in May.
The core PCE price index increased by 0.31% in May, which translates to a year-over-year rate of +3.38%, based on information in the CPI and PPI reports.
The Fed might be able to look through this if the war ends today. But it’s not anywhere except in Dump’s scrambled-egg brain, so a base of inflation is now building in the US that the Fed will have to chase before very much longer, and kaboom goes risk and AUD.
