ICE EUA FUTURES TECHS: (26) Trading ABove Support

• Computer software & accessories: 0.0% M/M in May as it moderated abruptly after an extremely strong run through Dec-Apr including 5.0% M/M in April.
• Recall, this series has a tiny weight in core CPI but is ~1.3% of core PCE. This moderation sees zero contribution to core PCE after 0.06pp in April and an average 0.06pp per month through Dec-Apr.
• Moderation was expected but this is possibly on the low side of analyst estimates:
  • Nomura had citied another strong increase in the Adobe DPI but one notably less so than the prior month.
  • Citi wrote “We expect a much more modest increase this month and for this component to move sideways to lower later in the year”.
  • JPM wrote “We expect that price increases continued there. However, price histories for some of the bestselling models on Amazon.com suggest that the rate of increase slowed substantially in comparison to earlier months.” 

Initial dovish reaction to the inline/slightly softer-than-expected CPI data (including a weak core goods print) countered by the lack of meaningful deviation vs. expectations. 

• FOMC-dated OIS effectively unchanged vs. pre-data levels across the liquid contracts, more or less fully discounting a 25bp hike through year-end.
• SOFR futures within 1.0 of closing levels, with SFRZ6 2.5 back from post-data highs.

A fairly in-line May CPI report all around with few major misses across categories vs consensus, with core and supercore both largely in line. 

• On the soft side was yet another weak core goods print (-0.11% vs +0.1% MNI Median) with medical commodities dragging; core services basically in line (0.29% vs 0.27% MNI median) with OER/rents not quite pulling back as much as expected from April's somewhat artificial rise; lodging/airfares/medical services on high-ish side with auto insurance soft.
• See table.