Its FOMC world series of poker week. Three of a kind (3*25=75bp) beats a pair (2*25=50bp).

The Federal Open Market Committee (FOMC) meeting is this week, Tuesday and Wednesday the 14th and 15th of June.

Market consensus is for a 50bp interest rate hike. Confidence in +50 was shaken after the US CPI data was released on Friday:

US May CPI +8.6% y/y vs 8.3% expected

  • m/m reading +1.0% vs +0.7% expected and 0.3% prior

Ugly stuff indeed. And 9% inflation may not be too far away:

  • El-Erian on US CPI inflation says “we may well get to 9%”

Consumers are rattled:

US June prelim UMich consumer sentiment 50.2 vs 58.0 expected

  • 6-point fall in consumer sentiment
  • down to a record low in the survey’s history (back to the 1970s)

Remarks from FOMC members leading up to the FOMC (prior to the current blackout period) have indicated a 50 basis point hike is to be expected. But does Friday’s CPI blowout (remember, leading into the figures the complacent consensus was that inflation had peaked … ’cause a reading came in lower, sheesh) put a ‘surprise’ 75bp interest rate hike from FOMC back on the table?

The pot hinging on Wednesday’s reveal is large.

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