Wednesday, June 11, 2025
Pre-market futures are rallying on this morning’s Consumer Price Index (CPI) report for May, released an hour before the opening bell. All major indexes were in the red ahead of the numbers, but currently the Dow is +90 points, the S&P 500 is +20, the Nasdaq +85 and the small-cap Russell 2000 +22 points.
Even bond yields retreated on the news, after earlier creeping northward. At this moment, the 10-year treasury is +4.45%, the 2-year has remained steady at +4.04% and the 30-year — something we’ve been tracking since it blossomed over +5% a couple weeks ago — ratcheted down a bit to +4.93%. All good news this morning.
Trump Announces Trade Deal with China
Of course, this nice jump in futures may have to do with the Truth Social post from President Trump, in which he stated a trade deal with China has been reached. “Full magnets” and “any necessary rare earths will be supplied, up front, by China,” the president said. He also mentioned Chinese college students would be able to attend classes at U.S. schools, and that “we’re getting a total of 55% tariffs, China 10%.”
Further confirmation and details will be sought throughout the rest of this trading day. For now, things are looking up for the market.
CPI Results Shrink or Stay Constant in May
Headline CPI came in at +0.1% this morning, 10 basis points (bps) beneath expectations and the previous month’s print. The most recent lower figure was -0.1% in March of this year. Core CPI month over month — stripping out volatile food and energy prices — also reached +0.1%, 20 bps below estimates. This was down from the +0.2% in April and +0.4% back in January of this year.
Headline CPI year over year is also known as the
“Inflation Rate,” and this came in-line with expectations at +2.4%, up from +2.3% the prior month. To find a lower read that that was more than four years ago, and we’re nicely off the +3.0% pace we saw back in January. Core year over year reached +2.8%, 10 bps light of expectations, and the third-straight print at this level. It’s still north of the Fed’s optimal +2.0% inflation rate, but at least we’re not swelling in the wrong direction.
Real earnings and owner’s equivalent rent were both up +0.3% in this report, most other segments were down: Gas -2.6%, Apparel -0.4%, also new and used vehicles and airlines were lower. The pause on reciprocal tariffs helped keep prices under control, which was one of the major concerns markets participants had when they were selling the market two months ago. These figures back up the market’s overall positive outlook.
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