STIR: Repo Reference Rates

Price components in today’s NFIB small business survey reinforce a view that May CPI – released tomorrow – might not see stronger tariff-driven inflation until the summer months. Whilst actual price changes held steady back close to their 2024 average, the breadth of planned price increases tilted higher again for the highest in just over a year even if it's still markedly lower than the surge in 2021/22. 

• The NFIB small business survey was stronger than expected in May at 98.8 (cons 96.0) after 95.8 in April, at what had been its lowest since Oct 2024.
• Whilst off a high of 105.1 in December ahead of Trump’s inauguration in January, it’s still elevated compared to levels through most of 2022-24 when it averaged closer to 90.
• We touched on the already known job components here, which included a notable cooling in wage growth metrics.
• Back to today’s new price setting information, the net share of firms who actually increased prices compared to three months ago held at 25% in May for a second month. It extends a pullback from a recent high of 32% in Feb (highest since May 2023) having returned almost to the 23.4% averaged in 2024 prior to US tariff announcements. It’s still high by pre-pandemic standards though, having averaged 11.5% through 2017-19.
• However, the share expecting to raise prices over the next three months resumed its increase to 31%, above the 30% in March for its highest since Mar 2024. It averaged 27.7% in 2024 and 22.3% in 2017-19.

• EUR/USD: Jun11 $1.1400(E2.0bln); Jun12 $1.1350(E1.9bln), $1.1395-00(E1.3bln), $1.1425-35(E1.3bln), $1.1440-50(E2.6bln), $1.1500(E2.2bln); Jun13 $1.1400-05(E1.6bln)
• USD/JPY: Jun11 Y144.90-00($1.0bln); Jun12 Y143.85-00($1.0bln); Jun13 Y144.00($1.2bln)
• AUD/USD: Jun12 $0.6475-85(A$1.1bln)

SX7E (19th Sep) 190/180ps, bought for 2 in 8k.