3 articles · Updated · yardeniquicktakes.com · Jun 10
Summary
2- and 10-year Treasury yields edged lower after May core CPI came in cooler than expected at 2.9% year over year, prompting an initial market read that the Fed could stay neutral next week.
May headline CPI still ran at 4.2%, roughly as expected, leaving inflation mixed rather than decisively soft and keeping the policy debate open ahead of the FOMC meeting.
The report argues that despite the bond market's reaction, the FOMC may still tilt toward tightening next week and deliver a rate hike at its July meeting.
Fed Chair Kevin Warsh favors trimmed CPI measures that show lower inflation, but any shift away from standard CPI and PCED gauges is seen as unlikely to win broad support.