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

06/07/22Trade Balance-$89.5b-$87.1b-$109.8b-$107.7b
06/07/22Revisions: Trade Balance
06/07/22Consumer Credit$35.000b$38.069b$52.435b$47.340b
06/08/22MBA Mortgage Applications-6.50%-2.30%
06/08/22Wholesale Inventories MoM2.10%2.20%2.10%
06/08/22Wholesale Trade Sales MoM0.70%1.70%1.80%
06/09/22Initial Jobless Claims206k229k200k202k
06/09/22Continuing Claims1303k1306k1309k1306k
06/09/22Bloomberg June United States Economic Survey
06/09/22Household Change in Net Worth-$544b$5297b$4859b
06/10/22CPI MoM0.70%1.00%0.30%
06/10/22CPI Ex Food and Energy MoM0.50%0.60%0.60%
06/10/22CPI YoY8.30%8.60%8.30%
06/10/22CPI Ex Food and Energy YoY5.90%6.00%6.20%
06/10/22CPI Index NSA291.694292.296289.109
06/10/22CPI Core Index SA291.945292.289290.455
06/10/22Real Avg Hourly Earning YoY-3.00%-2.60%
06/10/22Real Avg Weekly Earnings YoY-3.90%-3.40%
06/10/22U. of Mich. Sentiment58.158.4
06/10/22U. of Mich. Current Conditions62.963.3
06/10/22U. of Mich. Expectations55.355.2
06/10/22U. of Mich. 1 Yr Inflation5.30%5.30%
06/10/22U. of Mich. 5-10 Yr Inflation3.00%
06/10/22Monthly Budget Statement-$136.5b-$132.0b


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