Inflation - USD
A more hawkish than expected FOMC dot plot essentially sent all major asset classes lower with TIPS/BEs far from unscathed today.
A much stronger-than-expected May PPI print gave another point to Team Reflationista. BEs bull flattened as better TIPS/BE selling abated.
Yesterday’s CPI sugar high for the U.S. inflation asset class didn’t last too as real money sellers knocked BEs lower today.
Today’s stronger-than-expected May CPI print woke BEs up from a six-day narrowing spell but selling pressure still remained in the background.
BEs remained hellbent on limping into tomorrow’s CPI print as continued end-user selling/profit taking persisted.
Risk sentiment recovered from an early hacking scare but BEs didn’t come along for the ride amid more end-user TIPS/BE sales.
Position squaring ahead of Thursday’s CPI print weighed on BEs today against an otherwise bland macro backdrop.
While nominals took a hit on today’s solid ADP, TIPS took an even bigger hit with sources citing weaker commodities as the main culprit.
BEs softened up today despite a generally inflation-friendly backdrop with higher energy and another TIPS purchase operation unable to turn the tide.
After softening up despite an inflation friendly backdrop yesterday, BEs slowly but surely found some traction amid similar conditions today.