Advanced Share Registry : Market News 11 June 2021

Used vehicles, food, furniture, clothes, plane tickets, recreational goods, insurance and alcohol all increased, but the cost of living be damned! That was the message from markets last night as the Consumer Price Index revealed annual inflation accelerated to 5 per cent in May, the fourth consecutive fat gain and the fastest pace in five years. It also beat consensus goblins, who timidly guessed 4.4% from 4.2% in the prior month. Excluding food and energy, core CPI rose by a larger-than-forecast 0.7% and a 5.2% annualized as pandemic restrictions eased vaccinations flourished, and social activities

The blue-chip S&P 500 index climbed 0.5 per cent to a new record while the Nasdaq Composite scaled 0.8 per cent higher as Treasury yields remained subdued, hitting 1.44% as cash rushes in to find a home and price is inverse to yield.

To give you an idea, calling it a "ton" doesn't cut it. The Federal Reserve's short-term lending window, which offers 0% interest, took in $503 billion in cash on Wednesday, marking a third straight record as money managers struggle to find a better option over a negative real rate. A ton of dollar bills is worth $908,000. This flood of money may finally encourage the U.S. central bank to discuss tapering Q.E. at its coming two-day policy meeting starting June 15.

A "base-effect" reminder; these inflation rates are against last Mays uber-deflated prices. Predicted volatility (fear) over the S&P 500 tracking VIX fell asleep at 16.1 points, well under its long-run average of about 20. No fear.

Temporary shortages will fade away as supply catches up to demand to normalize these trends. Huzzah! The higher wages emerging as companies compete for reluctant workers -who experienced a living wage via pandemic benefits- will be far less transitory, though and may occur as the driving force behind future "taper talk". Groceries also lifted 0.4% in May and are likely to keep going as the cost of packaging and farm crops surge, with those producers and retailers comfortable passing on increases to customers not known to forego eating.

Unemployment Claims are within sight of more normal levels too. U.S. jobless applications delivered a print of 376,000 last week, a low since March 2020 as it closes in on the 200,000 benchmarks just before the pandemic. Continuing claims also declined 258,000 to a seasonally adjusted 3.5 million in the last week of May.

The virus gets a mention again today as it mounts a mini-fightback. New daily cases and deaths of the coronavirus-borne illness rose in the U.S. for a third straight day, and daily cases breached 20,000 for the first time in over a week. The number of states with increasing weekly trends for new cases hit 15 compared to last weeks one state with a rising trend. Around 15.73 million adults need a shot over the next 23 days to reach Biden's goal of 70% of the U.S. adult population vaxed by July 4. China is currently vaxxing 20 million people a day.

Dow Jones	34466.24	+19.1	+0.1%
US S&P500	4239.18	+19.63	+0.5%
US Nasdaq	14020.33	+108.583	+0.8%
UK FTSE	7088.18	+7.17	+0.1%
German Dax	15571.22	-9.92	-0.1%
Gold Futures ($US/oz)	1896.40	+0.90	+0.0%
Gold Futures ($US/t)	217.00	+3.50	+1.6%

Europe's STOXX 600 index closed marginally higher near record highs as their own Central Bank kept interest rates and asset purchases under their Quantitative easing program, unchanged despite the recent overshoot of its inflation target. Telcos rang up 1.2%, while travel shares went south for -1.2%. Our futures are flattish, down six twenty minutes to open after another record close yesterdays, the first breach of 7300 for the S&P/ASX 200 closing 32.3 points higher to 7302.5.

Disclaimer:

Produced by Advanced Share registry based on information available at the time of publishing. We believe that the information in this report is correct and any opinions, conclusions or recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability or completeness. To the extent permitted by law, neither Advanced Share registry (ABN 14 127 175 946) nor any of its subsidiaries accept liability to any person for loss or damage arising from the use of this report. The report has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should, before acting on the information in this report, consider the appropriateness of the information, having regard to the individual's objectives, financial situation and needs and, if necessary, seek appropriate professional advice. This report does not purport to be a complete statement or summary.