US DATA: Richmond Fed Regional Price Pressures Remained Elevated In May (2/2)
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.
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US-RUSSIA: WH Press Sec-Trump Rejects Putin's Temporary Ceasefire
White House Press Secretary Karoline Leavitt has said that US President Donald Trump is not content with the temporary Victory Day ceasefire offered in Ukraine by Russian President Vladimir Putin. Leavitt says that Trump wants to see a permanent ceasefire, and that the commander-in-chief is "increasingly frustrated" with both Putin and Ukrainian President Volodymyr Zelenskyy for failing to come to the negotiating table.
- Earlier today, Putin announced there would be a ceasefire implemented from 8-11 May in celebration of the 80th anniversary of the end of the Second World War. The Kremlin has threatened to retaliate with "an adequate and effective response" should Ukraine break the ceasefire.
- The meeting between Trump and Zelesnkyy in St. Peter's Basilica at the funeral of Pope Francis over the weekend, combined with rhetoric saying Putin "has to be dealt with differently, through 'Banking' or 'Secondary Sanctions?'
- In a further sign of concessions to Russia, Trump said “Oh, I think so,” on 27 April when asked whether Zelenskyy was willing to "give up" Crimea, which was annexed by Russia in 2014.
- In an interview with The Atlantic published earlier today, Trump said Putin “is going to be fine” in any negotiations. Trump “I’m trying to save a lot of lives in the world, You know, Ukraine and Russia — it’s not our lives, but it could end up in a Third World War.”
STIR: BLOCK/Screen: Jul'25 SOFR Call Spread Sale
- -12,000 SFRN5 96.50/97.00 call spds, 7.0 ref 92.265
USD: Greenback Slipping into WMR Fix, GBP/USD Narrows Gap With Key Level
Greenback sliding to new daily lows headed toward the Monday WMR fix. Worth recalling today marks month-end value date, so some of this USD selling bias may be flow driven as it picks up into the fix, however this price action is counter to most models, the majority of which saw a USD-buying bias into month-end for April.
- GBP/USD is through last week's highs, and now in close proximity to the 1.3424 bull trigger (as well as 1.3434, the Sept'24 high). The equivalent move for EUR/USD here has the pair above the 1.1400 handle, but well short of the more major resistance into 1.1550 and above.
