On the inflation front, U.S. producer prices in April rankled with their biggest monthly rise in four years, adding to news of above-forecast core consumer price gains in the same month.
Fed models now anticipate that headline annual inflation will be back above 4% in May, and bond markets are restive, with yields rising across the curve as futures move to price a possible Fed rate rise over the next 12 months.
Boston Fed boss Susan Collins said the central bank could no longer look through supply shocks as inflation had remained above target for five years now - and was rising again.
With no end in sight to the U.S.-Iran stalemate, a tough backdrop faces incoming Fed Chair Kevin Warsh, who will take the helm tomorrow after his appointment was confirmed by the Senate on Wednesday.
But rising borrowing rates have done little to dent stock market enthusiasm as Wall Street indexes pushed higher on Wednesday, taking the S&P 500 and Nasdaq to record closing highs. Stock futures pointed higher before the bell, while European shares rose after the open.
In Asia, Japan’s Nikkei hit another record and South Korea’s SK Hynix was on the cusp of becoming the country’s second trillion-dollar market cap after Samsung cleared that milestone last month. Asia’s chip giants were in focus again as Taiwan’s TSMC upped its standing forecast for chip demand through 2030 by 50% to $1.5 trillion.
Meantime, Britain’s political uncertainty eased a touch as Prime Minister Keir Starmer continued to resist calls to stand down. However, a leadership challenge may still be brewing, with health minister Wes Streeting reportedly preparing to resign and mount a bid to oust Starmer.
With that, onto today's column.
