For the y/y data:

CPI +0.3%

• continuing to claw its way out of deflation
• this is the third consecutive month of above zero CPI y/y
• expected +0.2%, prior +0.1%

PPI -2.5%

• still in deep deflation, as it has been since October of 2022
• expected -2.3%, prior -2.8%

The slight lift for the CPI is good news in China and should be a positive for China markets, and China proxy trades, such as AUD, at the margin.

Stay tuned, its an active week coming from China with the People’s Bank of China’s medium-term lending facility (MLF) rate decision due on Wednesday. No change to the rate is expected. If we do see cuts from the PBOC, the first is likely to be to the reserve requirement ratio (RRR). Actual cuts to lending rates would widen the interest rate differential with the rest of the world (cough … USA) and would further pressure the yuan. In the months to come the PBOC may have no choice but to cut rates if the economy continues to only stumble along though. There are ‚green shoots‘ showing (last week’s trade data was a welcome improvement), but they are sporadic and the debt-ridden property sector remains a huge drag.

This screenshot, from our Economic Calendar, is of y/y CPI. The CPI scale is on the righ- hand side and its a wee bit confusing, but I’ve put a box around the zero point to make it a little easier to see:

This article was written by Eamonn Sheridan at www.forexlive.com.

• US major indices close mixed with Nasdaq modestly lower. Dow up for 8th day in a row
• What company earnings will be released in the week starting May 13
• Crude oil futures settle at $78.26
• What key economic events the releases are on the schedule starting May 13?
• Goolsbee and Kashkari: In a wait-and-see mode.
• US federal budget for April surplus $210.00 billion versus $244 billion estimate
• Chicago Fed Pres. Goolsbee: Feds inflation target acts as an anchor on expectations
• Baker Hughes oil rig count -3 to 496.
• Fed’s Kashkari and Goolsbee are ahead
• The godfather of quants dies: Jim Simons dead at 86
• Why the bond market might be overreacting to rising UMich inflation expectations
• European indices close higher. German Dax, France CAC & UK FTSE 100 close at record levels
• White House Brainard: Debt ceiling fights have been unproductive
• More Minneapolis Fed Pres. Kashkari: Baseline is strong productivity rates will moderate
• Minn. Fed Pres. Kashkari: Fed is interested in AI because it contributes to productivity
• More from Fed Logan Logan: We want to see everybody testing the discount window
• University of Michigan consumer sentiment (preliminary) for May 67.4 versus 76.0 estimate
• Dallas Fed Pres. Lorie Logan: Fed has made substantial progress on inflation
• Kickstart the FX trading day for April 10 w/a look at the EURUSD, USDJPY and GBPUSD.
• Canada April employment change 90.4K vs 18.0K estimate
• The GBP is the strongest and the NZD is the weakest as the NA session begins
• ForexLive European FX news wrap: Currencies muted, equities look for perfect week
• BOE’s Pill: The persistent parts of inflation are falling

The US session was informed most by the University of Michigan consumer sentiment preliminary data which showed a sharp decline in the sentiment index to 67.4 from 76.0 . The expectations also fell sharply to 66.5 from 75.0 and current conditions also tumbled to 68.8 versus 79.0. To make the data even worse when you inflation expectations rose to 3.5% from 3.2% last month which was the highest level since November 2023. The five year inflation also rose to 3.1% from 3.0% last month.

Although somewhat shocking, there were reports that this month marked the first month that the survey was done electronically versus through phone calls (people pick up phones and answer questions on the economy….hmmmm). The commentary was that statistically people are more pessimistic about inflation when surveyed online. I wonder if generally there also pessimistic about the economy in general.

Nevertheless, the news sent yields higher, and erased gains in the NASDAQ index in particular which was up +91.13 points at session highs before rotating to the downside to as much as -52.74 points lower on the day ast session lows. The index ended up closing near unchanged. The S&P was up 0.17% in the Dow Industrial Average average rose for the 8th consecutive day with a gain of 0.32%.

For the trading week, the Dow closed higher for the 4th consecutive week. Both the Nasdaq and the S&P closed up for the 3rd straight week:

• Dow Industrial Average average rose 2.16%
• S&P index rose 1.85%
• NASDAQ index rose 1.14%

In the US debt market, the yield closed higher across the curve with the shorter end up the most:

• 2- year yield 4.871%, +6.5 basis points
• 5-year yield 4.516%, +5.6 basis points
• 10 year yield 4.500%, +5.1 basis points
• 30-year yield 4.642%, +4.2 basis points

For the trading week, the yields were mixed with the shorter end rising and the longer end falling:

• 2-year was up 5.2 basis points
• 5-year was up 2.8 basis points
• 10-year was down -1.2 basis points
• 30-year was down -2.6 basis points

There was more Fedspeak today with Fed’s Kashkari, Chicago Fed Pres. Goolsbee and Dallas Fed Pres. Lorie Logan all speaking.

Neel Kashkari from the Federal Reserve discussed economic issues and monetary policy, highlighting persistent U.S. housing supply challenges and the impact of higher interest rates on reducing this supply in the short term. Kashkari emphasized the necessity of controlling inflation and noted that low interest rates alone wouldn’t resolve housing issues. He expressed caution about the restrictiveness of current monetary policies, pointing out that the business community doesn’t view financial conditions as tight. Currently in a „wait and see“ mode, Kashkari is open to the possibility of future rate hikes but notes that any decision to increase rates would require significant justification. He remains uncertain about the neutral rate’s current level, suggesting a period of steady rates ahead unless conditions change markedly.Meanwhile, Chicago Fed Pres. Goolsbee was also talking a lot today discussed the managing inflation, particularly emphasizing the 2% target as an anchor for expectations. He acknowledged the current high short-term inflation expectations but cautioned against overreacting to these. Goolsbee highlighted that although inflation has not shown signs of settling at 3%, the real Fed funds rate is the highest it has been in decades, suggesting a restrictive monetary policy stance. He mentioned the complexity of interpreting recent data due to positive supply developments, including a significant boost from increased immigration which adds approximately 80,000 jobs monthly. Housing inflation remains a critical concern, with rates contributing to supply issues but not fully explaining the persistent high inflation in housing. Despite various economic indicators and the challenges of housing inflation, Goolsbee remains cautiously optimistic about reaching the 2% inflation target, provided housing inflation decreases. He also noted the ongoing recovery of supply chains and potential lasting benefits from labor supply increases into 2024, maintaining a stance that nothing is off the table in terms of policy adjustments to control inflation.

Finally, Dallas Fed Pres. Lorie Logan was probably the most hawkish of the three. Logan highlighted that the Federal Reserve has made substantial progress on combating inflation, noting that the economy and labor market are currently strong. However, she expressed concerns, stating that the fight against inflation is not over as the first quarter inflation data was disappointing. Logan pointed out the presence of significant upside risks to inflation and uncertainties around whether the current policy is sufficiently restrictive. She emphasized that it is too early to consider lowering interest rates and stressed the importance of maintaining flexibility in monetary policy. Additionally, Logan suggested that the neutral interest rate level, which balances the economy without stimulating or restraining growth, may have risen, indicating a possible shift in the economic environment that could affect future policy decisions.

In the forex market, the major indices are ending the day fairly scrunched together in up and down trading. The CAD was the strongest of the major currencies, while the NZD was the weakest.

For the trading week, the greenback is ending mixed and little changed vs the major currencies. Below are the % changes of the greenback vs the major currencies:

• EUR, -0.08%
• JPY, +1.849%
• GBP, +0.20%
• CHF, +0.16%
• CAD, -0.11%
• AUD, +0.12%
• NZD, -0.9%

Thank you for your support this week and wish you all a wonderful weekend.

This article was written by Greg Michalowski at www.forexlive.com.

The major stock indice are ending the day mixed with the Nasdaq down marginally. THe S&P and the Dow rose. The Dow closed higher for the 8th consecutive week. The S&P was up nearly 2% on the week and all the indices moved higher this week.

The final numbers are showing:

• Dow industrial average rose 125.06 points or 0.32% at 39512.85
• S&P index rose 8.62 points or 0.17% at 5222.69
• Nasdaq index-5.40 points or -0.03% at16340.87

The small-cap Russell 2000 fell -13.85 points or -0.67% at 2059.77

For the trading week:

• Dow industrial average rose 2.16% (fourth week in a row higher)
• S&P index rose 1.85% (third week in a row higher)
• NASDAQ index rose 1.14% (third week in a row higher)

This article was written by Greg Michalowski at www.forexlive.com.

There are a few major still releases but overall, the market is not going to be influenced much by the results. The one exception will occur until the following week when Nvidia reports earnings scheduled for May 22.

Tuesday, May 14

• Alibaba
• Home Depot
• Sony

Wednesday, May 15

• Cisco *

Thursday, May 16

• Walmart
• Baidu
• John Deere
• Under Armour
• Applied Material *

* After the close

This article was written by Greg Michalowski at www.forexlive.com.

Crude oil futures are settling at $78.26. That is down -1.0% or -1.26%

The price is settling near the lows for the day. The low for the day reached $78.23. We left for the day was at $79.93.

For the trading week, the price was up $0.40 or 0.52%.

Looking at the daily chart, the price action today traded closely between the 200-day moving average above at $80.03 (the high was $79.93) and the 100-day moving average below. $78.33 (the low for the day was just below that level at $78.23).

This article was written by Greg Michalowski at www.forexlive.com.