Inflation expectations increased across the board in the latest UMich Sentiment Survey, rising to 3.1% expected over the next year from 2.9% last month, and 3% over the next three years from 2.8%.

Every time we get a hot inflation print people rush to attribute it to a few categories with large increases.

It is, indeed, true that if you take out all the big increases you get lower inflation.

But also true that if you take all the big decreases you get higher inflation.

US 10-year Treasuries are having their worst day since May 2023, with yields surging after the one-two punch of a hot CPI and a bad auction. Peter Boockvar: '10 yr auction was bad...Dealers were left with 24% of the auction, which is the most since Nov. 2022.'

“The sound you heard there was the door slamming on the June rate cut.” bloomberg.com/news/newslette…

Traders are now pricing in an 18% chance of a June Fed rate cut and fewer than two cuts this year, from a 53% chance of a June move yesterday.

The big mistake in 2021 was people didn't listen to companies, which 'were clearly saying we have inflationary pressures:' Mohamed A. El-Erian. 'This time around listen to the earnings call & they are worried about the outlook for the rest of the year.' bloomberg.com/news/newslette…

US big-cap stock investors are getting more and more bullish. US small businesses are getting more and more pessimistic, with their optimism falling to a more than 11-year low. bloomberg.com/news/articles/…

Here's an argument from JPMorgan's Jack Manley that higher rates are actually inflationary at this point, and prices won't stabilize more significantly until the Fed starts cutting rates. bloomberg.com/news/newslette…

This is a great chart pointing to why the US is so concerned about China’s industrial over-capacity: Chinese exports of autos and lithium-based batteries have grown dramatically since the pandemic.

US 10-year inflation-adjusted yields are at the highest levels of 2024.

The S&P 500 hasn't had a -2% day since February 21, 2023. 'This is the 12th longest such streak since 1928:' Citi's Stuart Kaiser

DB: 'How can credit sell-off in a world where growth is strong & the Fed is dovish? The largest risk is the market doubting the Fed's ability to cut in 2025 & 2026....Even after last Friday's jobs report, we are still pricing more 2025 & 2026 cuts than at the start of this year'

Apollo's Torsten Slok shows how much immigration has contributed to the US's labor force growth:

The Fed has shrunk its balance sheet by about $1.5 trillion since starting quantitative tightening. A big question for some strategists is at what point it'll start mattering more significantly to markets.

The global supply of public equity is shrinking at its fastest pace in at least 25 years. The universe of public equities has already shrunk by a net $120bn this year, exceeding the $40bn taken out over all of last year: JPM data ft.com/content/63c1c4…