June 10, 2022 Headlines

Short and intermediate Treasury yields are fresh highs for the current cycle after the May CPI report came in above expectations for both headline and core inflation. The only term Treasury security without a 3% handle at the moment is the 2-year note at 2.9% (up 9 bps on the day so far). Headline inflation surged 1% m/m versus expectations of a 0.7% increase, boosted by a 4.1% increase in gas prices and 1.2% gain in food prices. On a year-over-year basis, headline CPI rose 8.6%, 30 bps more than expected to a fresh 40-year high. The annual comparison included double-digit increases for several necessities, including energy (+34.6%) and groceries (+11.9%). The latter is the biggest y/y gain for the category since 1979.  The core reading, which excludes food and energy prices, rose 0.6% m/m in May (0.5% expected) and 6% y/y (5.9% expected. There were whispers in the market ahead of this morning’s release that the report would be above expectations, which is why front-end Treasuries were weaker to start the day. The curve is now flatter on the day (2yr/10yr spread -10 bps) as the market firms up pricing for a 50 bps rate hike at the September FOMC meeting.

Jason Haley
Chief Investment Officer

Date Event Surv(M) Actual Prior Revised
06/07/22 Trade Balance -$89.5b -$87.1b -$109.8b -$107.7b
06/07/22 Revisions: Trade Balance
06/07/22 Consumer Credit $35.000b $38.069b $52.435b $47.340b
06/08/22 MBA Mortgage Applications — -6.50% -2.30% —
06/08/22 Wholesale Inventories MoM 2.10% 2.20% 2.10% —
06/08/22 Wholesale Trade Sales MoM — 0.70% 1.70% 1.80%
06/09/22 Initial Jobless Claims 206k 229k 200k 202k
06/09/22 Continuing Claims 1303k 1306k 1309k 1306k
06/09/22 Bloomberg June United States Economic Survey
06/09/22 Household Change in Net Worth — -$544b $5297b $4859b
06/10/22 CPI MoM 0.70% 1.00% 0.30% —
06/10/22 CPI Ex Food and Energy MoM 0.50% 0.60% 0.60% —
06/10/22 CPI YoY 8.30% 8.60% 8.30% —
06/10/22 CPI Ex Food and Energy YoY 5.90% 6.00% 6.20% —
06/10/22 CPI Index NSA 291.694 292.296 289.109 —
06/10/22 CPI Core Index SA 291.945 292.289 290.455 —
06/10/22 Real Avg Hourly Earning YoY — -3.00% -2.60% —
06/10/22 Real Avg Weekly Earnings YoY — -3.90% -3.40% —
06/10/22 U. of Mich. Sentiment 58.1 — 58.4 —
06/10/22 U. of Mich. Current Conditions 62.9 — 63.3 —
06/10/22 U. of Mich. Expectations 55.3 — 55.2 —
06/10/22 U. of Mich. 1 Yr Inflation 5.30% — 5.30% —
06/10/22 U. of Mich. 5-10 Yr Inflation — — 3.00% —
06/10/22 Monthly Budget Statement -$136.5b — -$132.0b —

 

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