10.06.2026 - CPI: 4.2% – Markets Cheer
US consumer prices continued to accelerate in May, driven largely by surging energy costs. Headline inflation climbed to 4.2% year-on-year, up from 3.8% previously, marking the hottest annual reading since April 2023.
The May Inflation Data:
CPI YoY: +4.2% (est. +4.2%) – up from 3.8%
CPI MoM: +0.5% (est. +0.5%)
Core CPI YoY: +2.9% (est. +2.9%) – up from 2.8%
Core CPI MoM: +0.2% (est. +0.3%)
(Core CPI excludes food and energy prices)
Markets: investors cheer rising inflation - Markets welcomed the report, with investors focusing on the softer-than-expected monthly core inflation figure. The fear had been that inflation would come in even hotter.
Equities: US Futures turned positive following the release
Bonds: Government bond yields moved lower after the data - US 10-year Treasury yield 4.53%, Japanese 10-year yield at 2.68%
Commodities: Oil prices continued to rise amid renewed tensions with Iran - WTI USD 89, Brent USD 93. Precious metals down with gold at USD 4’160, silver USD 64
Cryptos: traded lower on the day but recovered after the inflation report - Bitcoin USD 62k.
Currencies: USD weakened after data - remains in narrow trading range
Volatility: VIX elevated above 20 but tending lower after data
My View: Markets continue to read the signals the wrong way. Investors seem to celebrate the lower-than-expected monthly core inflation figure. However, the broader picture tells a different story: inflation is accelerating again.
In my view, markets are once again drawing the wrong conclusions from the data. It is just another example of investors ignoring where economic trends are heading.
At the same time, the conflict with Iran remains far from resolved. Only yesterday, President Trump suggested that a deal with Iran was close. Today, however, a deal suddenly appears almost impossible. Following the downing of a US helicopter, both Washington and Tehran retaliated last night, increasing the risk of further escalation.
Meanwhile, price swings in crowded trades are becoming increasingly violent. Yesterday alone, the Nasdaq surged 1.4%, then plunged more than 5.4% within just three hours, before rebounding 3.3% into the close.
As highlighted in my Weekend Mail after last Friday's sharp moves, these are warning signs that should not be ignored. The more frequently these violent swings occur, the greater the risk that future drawdowns become faster and more severe.
So far, this does not resemble a wave of panic. Instead, it looks more like a rotation of capital between sectors. But history shows that periods of extreme volatility and increasingly unstable price action in different asset classes often emerge before investor sentiment changes more broadly.
Investors should pay attention.
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