US core CPI (seasonally adjusted) increased in May, with the index rising to 336.1213 from 335.423 in the prior month. The move indicates a continued month-on-month lift in underlying consumer prices, excluding food and energy.<\/p>\n
The rise in May’s core CPI to 336.121 shows inflation is still present, but the pace is slowing down. This monthly increase of just 0.21% is the slowest we’ve seen this year, reinforcing the view that the Federal Reserve will hold rates steady in its meeting next week. However, this will increase the market’s focus on a potential rate cut later in the third quarter.<\/p>\n
We are seeing implied volatility on S&P 500 options decrease, as this report removes some uncertainty about the Fed’s immediate path. The VIX, a key measure of market fear, has already dropped 7% to below 17 this morning. This suggests opportunities to sell premium through strategies like iron condors, capitalizing on the market potentially entering a more predictable, range-bound period.<\/p>\n
The market for interest rate futures has reacted quickly, with futures contracts now pricing in a 70% chance of a rate cut by the September 2026 meeting, up from 50% just yesterday. We see traders positioning for lower rates by buying futures on the Secured Overnight Financing Rate (SOFR). This makes receiving fixed rates in interest rate swaps a more attractive position over the coming weeks.<\/p>\n
This environment is particularly favorable for rate-sensitive sectors like technology and real estate. We are looking at buying call options on tech-focused indexes as a way to gain upside exposure to a potential rally. Historically, even the suggestion of a dovish pivot from the Fed has acted as a strong catalyst for these growth-oriented areas of the market.<\/p>\n","protected":false},"excerpt":{"rendered":"
May core CPI edged up 0.21%, easing inflation fears; Fed likely holds, volatility drops, rate-cut bets rise.<\/p>\n","protected":false},"author":103,"featured_media":17021,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[100,109,46,69,97],"class_list":["post-54848","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates","tag-inflation","tag-markets","tag-policy","tag-sp500","tag-volatility"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t