EQUITY TECHS: E-MINI S&P: (U5) Fresh Cycle High

• As foreshadowed by country-level data, the pullback in Eurozone services inflation to 3.23% Y/Y (vs 3.98% prior) was largely a function of lower airfares, package holidays and accommodation inflation (i.e. Easter-sensitive categories).
• Despite this, the ECB has expressed broader confidence around the outlook for services inflation. In the June projections, they staff noted that “In the medium term, the decline in HICPX inflation mainly relates to services inflation as post-pandemic reopening effects unwind and the as the downward impact from monetary policy tightening continues to feed through. A faster unwinding of services inflation is seen to be hindered by declining but still elevated upward pressures from labour cost developments.” Services inflation is seen at 3.2% Y/Y in Q4 2025 and 2.5% Q/Q in Q4 2026.
• Indeed, the ECB’s underlying inflation metrics saw a broad-based softening in May, converging slowly towards the 2% level.
• Services related to package holidays and accommodation eased to 2.84% Y/Y in May (vs 6.73% prior), the lowest since 2021. Meanwhile, services related to transport (mostly airfares) fell to 3.62% Y/Y (vs 5.74% prior).
• Other services categories saw much smaller movements on the month:
  • Services related to communication: -2.59% Y/Y (vs -1.92% prior),
  • Services related to housing: 3.28% Y/Y (vs 3.29% prior).
  • Services – miscellaneous: 3.86% Y/Y (vs 4.00% prior).
  • Services related to recreation and personal care, excluding package holidays and accommodation: 3.72% Y/Y (vs 3.74% prior).
• The ECB’s seasonally adjusted data saw immaterial revisions relative to the flash release. Services prices fell 0.17% M/M (in line with flash) while non-energy industrial goods were revised down to 0.03% M/M from 0.06% initial.

• SPX: 5,999.3 (+0.3%)
• DJIA: 42,284 (+0.2%/+69pts)
• NDX: 21,802.6 (+0.4%)

Riksbank Governor Erik Thedeen speaks to MNI in an interview - On MNI Policy MainWire now, for more details please contact sales@marketnews.com