GOOD MORNING! The markets have rallied coming into Wednesday on the expectation of a softening in price pressures. They got that and more. The Consumer Price Index (CPI) was slightly softer than expectations with the headline number increased at 0.3% in April as compared to an advertised consensus guess of +0.4%. The core (excluding food & energy) also increased by 0.3% last month after rising by 0.4% in the first 3 months of the year. The data put the year-over-year rates at the anticipated 3.4% and 3.6%, respectively. Those are down from 3.5% and 3.8% in March. Also released at the same time where the May Empire State Manufacturing Index and April’s retail sales. Both were weaker than expected with retail sales being flat in April from a downward revised March reading. Consumers likely lost momentum on slowing hiring and wage growth. Price of Treasuries spiked higher as the early data fueled fresh bets on Fed rate cuts and stayed elevated as the NAHB Housing Market Index also posted a notable larger decline than anticipated. Stocks followed suit with the Dow, S&P and NASDAQ all reaching new closing highs.
      The media made sure everybody knows that the S&P made its 21rd new high in 2024. US stock index futures hint that gains at the open may be extended. Of course that depends on the data released before the opening bell, and there is a lot of it. On tap this morning are the latest weekly initial and continuing claims for unemployment benefits, April’s housing starts/building permits issued, New York Fed’s May Services Business Index, the Philadelphia Fed’s May Business Outlook, April’s import/export price indices, industrial production and capacity utilization. Throughout the day there will be Fed speakers and the Treasury will be auctioning $80 billion each of a 4- and 8-week T-bills. The Treasury curve is flattening in early morning trade with hedge funds and fast money traders, wearing their WIN (Whip Inflation Now) button believing the worm has turned and running out the curve seeking duration in the hopes cheap money is on the way.