Morning Minutes

US Inflation, Gamestop Earnings, and ECB Decision In Focus



US headline consumer prices jumped even more than expected in May (5.0% vs street 4.7% and previous 4.2%). Excluding the usually more volatile food and energy components (core inflation), prices popped more than expected (3.8% vs street 3.4% and previous 3.0%) indicating rising and widespread inflation pressures. For headline inflation, this was this highest level since the summer of 2008, while for core inflation this was the highest level since at least 2007.

On this news, the US 10-year treasury note yield has peeked back up above 1.50%. US index futures had been flat ahead of the announcement, teetered for the first five minutes afterward, and have since started to climb with Dow Futures now up over 100 points, a sign of investor confidence and resilience. This market action suggests that investors were expecting high inflation and do not appear to think this is enough of a spike to change the Fed’s mind on stimulus at next week’s FOMC meeting, particularly since the European Central Bank maintained its asset purchase program this morning even with inflation rising across the pond as well.  

Gamestop is down 7.1% in premarket trading but had been down even more overnight despite announcing stronger revenues ($1.28B vs street $1.16B and year ago $1.02B) and a smaller loss per share (-$0.45 vs street $0.85). The company also appointed two former executives from Amazon to be its new CEO and CFO.  It’s unclear if this is investors taking profits against the news or if traders have been rattled by the company’s intent to issue more shares or the SEC asking the company for documents as it looks into GME share trading.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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