Market News

Just the data in this post. I'll have more to come on this separately, details etc.

AUD is down on the results. Headline and m/m core lower than expected.

Japan's services producer price index measures the rate of change in prices that domestic service-sector businesses charge one another for services, capturing upstream cost pressures before they flow through to consumer prices. It is watched as an indicator of pipeline inflation and wage cost pass-through.

CBA forecasts Australian headline inflation at 4.3% for April while Westpac sees 4.8%, with both banks flagging firm underlying price pressures despite fuel excise relief.

Summary:

• CBA forecasts annual headline CPI easing to 4.3% in April, with lower fuel prices the primary drag, driven partly by a temporary fuel excise reduction
• Westpac takes a more hawkish view, forecasting headline CPI rising to 4.8% annually, with holiday travel and clothing and footwear costs pushing prices higher
• Both banks see trimmed mean inflation holding firm, with CBA forecasting 3.4% annually and Westpac 3.5%; market services inflation estimated at 3.8% by CBA
• CBA expects quarterly trimmed mean inflation to accelerate to 1.0% in Q2 2026, though flags significant…

• S&P, Nasdaq and Russell 2000 close at record levels. Dow falls on the day
• Fed's Kashkari: The Fed could embark on a series of hikes in response to inflation.
• Micron is taking off. Shares are up 20.8% today and 860% vs a year ago.
• US treasury auctions $69B of 2 year notes at a high yield of
• Netanyahu: Military is operating in Southern Lebanon and taking control of strategic areas
• US Navy resumes escorts in Strait of Hormuz; Tanker freed after months stranded
• Dallas Fed Manufacturing Business Index for May 0.40 vs -2.30 last month
• US consumer confidence for May 93.1 vs 92 estimate
• ECB Sleijpen: ECB is between baseline and adverse scenarios
• S&P/Case Schiller Home index for March -0.2% vs 0.1 estimate. YoY 0.8% vs 1.0% est
• NEC Hassett: Energy prices…

As the US and Iran maneuver through the minefield of a ceasefire memorandum, Israel and Lebanon continue the fight.

Netanyahu is saying that

• the Israel military forces are on the ground in Southern Lebanon and taking control of strategic areas.

The tightrope act is precarious. Will peace eventually prevail or will war escalate?

MORE: Israel Official says that any plans to attack Iran are currently ruled out following a US message.

However, earlier the US said that it DOES NOT view the recent Israeli military escalation in Southern Lebanon negatively. The add that Hezbollah is responsible for the collapse of the truce because of its drones.

It takes two to tango and it seems that is what is happening currently

So:

• US/Israel vs Iran…

The US treasury auctions $69B of 2 year notes at a high yield of 4.071%

• WI at the time of the auction 4.071%
• Bid to cover 2.64X vs average of 2.62X
• Dealers 12.3% vs 12.8 avg
• Directs 30.1% vs average of 29.2%
• Indirects 57.6% vs 6-month average of 57.9%
• Dealers 12.3% vs average of 12.8%

Auction Grade: C

The details are congruent with the averages over the last 6-months.

The US yields remain down on the day but off the lows.

• 5 year yield is down -6.4 basis points at 4.200%
• 10 year yield is down -6.8 basis points at 4.504%. The yield did move below the 4.50% level to 4.475%, but could not sustain momentum below the level. Technically, the yields did move below the 200 hour MA at 4.553% and below the 38.2% of the move up from the May 19 low at 4.511%.…

The WSJ is reporting that the US Navy has restarted assisting ships through the Strait of Hormuz.

• The U.S. Navy has restarted assisting commercial vessel crossings through the Strait of Hormuz.
• U.S. military officials told the WSJ that a Greek supertanker carrying 2 million barrels of crude oil was escorted through the waterway off the Omani coast.

The tanker had been stranded in the Middle East Gulf since early March and is now heading to India to unload its cargo. The operation is part of a renewed version of “Project Freedom,” a prior U.S. effort designed to safely guide ships through the critical shipping lane. The earlier Project Freedom initiative was halted roughly 36 hours after it initially began.

U.S. officials said the Navy…

• Prior month 92.8 revised higher to 93.8
• Consumer confidence 93.1 vs 92 estimate

Details from the Conference Board.

• The Conference Board Consumer Confidence Index slipped 0.7 points to 93.1 in May from a revised 93.8 in April.
• The Present Situation Index fell 3.2 points to 121.2, reflecting softer views on current business and labor market conditions.
• The Expectations Index rose 1.0 point to 74.4, showing modest improvement in the outlook for business and labor market conditions over the next six months.

The survey period ran from May 1–19 and included the impact of the ongoing Middle East war and rising global price pressures.

• Consumers were less positive about current economic and labor market conditions compared to April.
• Expectations…

• Prior month -2.3
• Dallas Fed Manufacturing Business index for May 0.40 vs -2.30 last month.

Details of the report:

• Production index fell 10 points to 9.4, still signaling modest manufacturing expansion.
• Capacity utilization index dropped 15 points to 5.2.
• New orders index declined 4 points to 6.4.
• Shipments index fell 8 points to 7.4.
• General business activity index edged up to 0.4 from negative territory, signaling little change in overall activity.
• Company outlook index slipped to 0.3 from 3.0, indicating stable business sentiment.
• Outlook uncertainty index held relatively steady at 19.2, remaining above the long-run average of 16.9.
• Employment index was unchanged at 0.2, pointing to flat payroll growth.
• Hours worked index declined…

• Prior month -0.1%. More than half of major U.S. metropolitan markets posted year-over-year price declines in February,
• Case Schiller index for March -0/25 vs 0.1% estimate
• YoY index 0.8%% vs 1.0% estimate
• Chicago reported the highest annual gain among the 20 cities with a 6.1% increase in March, followed by New York and Cleveland with annual increases of 4.0% and 3.0%, respectively. Seattle posted the lowest return in March, falling 2.5%.

The S&P Cotality (formerly known as CoreLogic) Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate nationally.

Strongest 1-year home price gains

• Chicago: +6.09%
• New York: +4.02%
• Cleveland: +2.99%
• Boston:…

ECBs Sleijpen is saying that the:

• ECB will do all it can to tame inflation
• The ECB is between baseline and adverse scenario

Earlier today, Schnabel said that the ECB should raise rates while Lane that that the ECB is not pre-committing to a particular path past June .

Current market expectations are leaning strongly toward a 25 basis point rate hike at that meeting. Markets are pricing roughly an 80%–90% probability of a hike, which would take the ECB deposit rate from 2.00% to 2.25%. The decision will be announced on June 11.

The shift toward tighter policy has been driven by:

• Higher energy prices
• Concerns inflation could stay above the ECB’s 2% target
• ECB officials signaling growing concern about inflation persistence
• Rising inflation…

• Should see lower oil prices once the strait opens.
• Stocks are celebrating the gains in productivity
• Consumers will feel falling oil prices "right away"
• The price of gas has to come down.

The AAA price of gas is currently at $4.49 down modestly from most recent highs near $4.54. A month ago it was at $4.10. A year ago it was at $3.18.

The price of crude oil moved to a low of $89.41 and below an upward sloping trend line from the February low. The inability to stay below that MA gave the buyers the go-ahead ot push higher.