OPTIONS: Expiries for Jun30 NY cut 1000ET (Source DTCC)

The Richmond Fed's May business surveys showed no discernable change in heightened inflation dynamics seen in prior months.

• In manufacturing, current prices paid were unchanged vs April at 5.4% (all prices are expressed as reported price changes versus 12 months earlier), with prices received 2.7% (compare these to 2.4% / 1.2%, respectively, at the start of 2025). Inflation expectations (expected price change in next 12 months) dipped by 1ppt (prices paid to 7.0%, received 5.0%) but were still very high (4.0%/3.0% respectively at the start of 2025).
• Similarly for services, current prices received was unchanged at 3.0%, with prices paid up 0.1pp to 5.0% (3.6% and 4.7% at the start of 2025). Expectations were mixed, potentially suggestive of tougher margin pressures: expected 12M prices paid ticked up to 6.0% from 5.9%, with received down to 3.6% from 4.2% (respectively these were 4.1% / 3.6% at the start of 2025).
• Overall price pressures looked elevated in the region, though look short of the heights of the pandemic supply chain/reopening price pressures. And again, the survey was conducted on both sides of various tariff developments, most notably May 12's US-China truce, so June's survey may provide a more relevant snapshot.

Latest block trade lodged at 10:28:05 NY/15:28:05 London:

• TUU5 5K lots blocked at 103-18.75, looks like a seller.
• DV01 ~201K.

The Richmond Fed's regional manufacturing and services surveys for May showed improved activity, as expected - but remained in negative territory.

• Unlike some other regional Fed reports, there is limited anecdotal "evidence" or commentary for what is driving these survey results, but the figures are consistent with other "soft" data that the worst of the tariff fears may have subsided but sentiment remains weak.
• Further obscuring the read-through is the survey dates, which (based on the survey methodology) will have been conducted between April 24 and May 21, so it straddles both sides of the US-China trade war climbdown on May 12.
• The headline manufacturing composite index rose to -9 (in line with consensus) from -13, improving after two large monthly declines. The three components of the composite ticked higher: new orders ticked only slightly higher, to -14 from -15, shipments to -10 from -17, and employment to -2 from -5. Expectations, while still (unusually) negative for the 3rd consecutive month, saw a drastic improvement, rising 31 points to -6.
• The services readings similarly largely improved in some aspects but were still weak. The local business conditions index jumped 12 points to -18 (no consensus), with the 6-month outlook up 11 points to -18.
• Both marked the 3rd consecutive negative reading, and the report notes that regional service sector activity overall slowed in May, with the revenues index falling 4 points to -11, and employment fell 8 points to 0 (albeit demand, and expected future employment, revenues and demand, rose).