Commenting on the Largest CPI Move Since 1992 and US Treasury Yields on the Up

  • Treasury
  • 10.06.2021 04:45 pm
Commenting on the largest US CPI move since 1992, Ali Jaffari, Head of North American Capital Markets at Validus Risk Management, said: “US CPI exceeded consensus estimates for the 3rd month straight with YoY CPI coming in hot at 5.0% for the month of May and although a large print was expected, given the lower CPI base figure from depressed levels in May 2020, a 5% YoY figure with a 3.8% YoY core print (marking the largest move since 1992) is hard to ignore.

“The market has been trading in relatively rangebound fashion leading up to the data release, however, this morning’s release will restoke concerns around inflation and place further pressure on the Fed to acknowledge the continued rise in prices and prepone tapering discussions.

“On the back of the print, US Treasury yields are picking up steam and trading higher across the board this morning, with the 10-year up by ~4bps. In line with the rise in yields, the broader dollar index is trading higher this morning amidst renewed concerns on inflation. The market will now look closely to the Fed for guidance at its June 16 FOMC and whether any timeline on tapering talks is to be disclosed.”

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