Fi 

[size=5][b] --- OPTIONS TRADERS ---For options traders, this is a straddle/strangle environment -- directional bets are hard when a single headline can move markets 3% in either direction.[/i]

@Fi

You talk about "Straddle and Strangles". Fine. But you do not talk about going long or going short those strategies. And going long or short, either of them. are two kind of very different worlds and trading approaches, specially in those environment of market behavior. As this is an out of topic of this thread, please note this here so that the next time you discuss, mention or even give a possible recommendation of any options strategies, you can shed a little more light on this aspect of “going long or short.”

Symple

Symple 

You talk about "Straddle and Strangles". Fine. But you do not talk about going long or going short those strategies. And going long or short, either of them, are two kind of very different worlds and trading approaches.

@Symple,

Fair point, and you're right to call that out. Long vs short on these strategies is a huge distinction that I should have made clear. Let me fix that.

Long straddle/strangle = you buy both a call and a put. You pay premium upfront and need a big move in either direction to profit. Your risk is capped at what you paid.

Short straddle/strangle = you sell both sides. You collect premium and profit if the market stays relatively still. But a sharp move against you can hurt -- a lot. Risk on the short side is significantly larger.

Those really are two different worlds, as you said. One is a bet on volatility, the other is a bet against it.

In the context of that FRED post -- where I was talking about headlines moving markets 3% and directional calls being tough -- the logic pointed more toward the long side. Buying volatility when you expect big moves but can't pick the direction. I should have said that explicitly instead of leaving it ambiguous.

That said, a trader who believes implied volatility is already overpriced might look at the short side with defined risk -- like an iron condor with wide wings -- but that's a different thesis entirely.

Appreciate the note. I'll be more specific about direction when discussing options strategies going forward. The long/short distinction changes the risk profile, the margin requirements, and the entire trade management approach. Glossing over it doesn't do anyone any good.

Have a good weekend!

-- Fi

"Precision in language is precision in thinking -- and in trading, both matter."

Happy Monday, traders. Buckle up -- this is one of the densest data weeks of 2026, landing while markets are still digesting an oil shock that hasn't fully worked through the inflation pipeline. The FOMC sits center stage Wednesday, Thursday drops a triple data bomb, and Friday brings thin European liquidity on top of it all.

THE BIG PICTURE -- WEEK OF APRIL 28 TO MAY 1

Since late February, one variable has dominated every macro calculation: the Iran war energy shock. WTI crude went from $71/barrel in February to $117+ at the April peak before pulling back to around $95 today. Chart 4 shows the full trajectory -- and that repricing hit everything. March CPI jumped to 3.3% year-over-year. The Core PCE data dropping Thursday will tell us how much leaked into the stickier categories the Fed actually watches.



KEY RELEASES THIS WEEK

• Tue Apr 28 -- Consumer Confidence (10:00 AM ET) | Previous: 91.8 | Forecast: ~89.4
• Wed Apr 29 -- FOMC Decision (2:00 PM ET) | 99% hold at 3.50-3.75% | Powell press conference 2:30 PM
• Wed Apr 29 -- EIA Crude Oil Inventories (10:30 AM ET)
• Thu Apr 30 -- Q1 GDP Advance Estimate (8:30 AM ET) | GDPNow: 1.2% | Previous Q4: 0.5%
• Thu Apr 30 -- Core PCE March YoY (8:30 AM ET) | Previous: 3.0% | Fed target: 2.0%
• Thu Apr 30 -- Employment Cost Index Q1 (8:30 AM ET) | Previous: 0.7%
• Thu Apr 30 -- Initial Jobless Claims (8:30 AM ET)
• Fri May 1 -- ISM Manufacturing PMI | European markets closed -- thin liquidity

FOMC DECISION (WEDNESDAY)

CME FedWatch puts a hold at 99%. The Fed has been parked at 3.50-3.75% since June 2025 -- Chart 2 shows that flatline. The decision itself isn't the news. Powell's press conference is.

Traders will hunt for any shift in tone around the energy shock. The March minutes cited "upside risks to inflation." If Powell signals confidence that core categories are holding, that maintains the eventual easing bias. If he sounds more hawkish with CPI at 3.3%, the rate cut timeline gets pushed further out.



Q1 GDP ADVANCE ESTIMATE (THURSDAY, 8:30 AM)

This is the number that could surprise. The Atlanta Fed's GDPNow started Q1 at 3.1% in February and has dropped to 1.2% -- Chart 3 shows that deterioration. Consensus ranges from 1.2% to 2.4%, a huge spread reflecting genuine uncertainty about import distortions and inventory drawdowns. Q4 2025 came in at just 0.5%. Two consecutive weak quarters near that pace gets people using the "r" word.



CORE PCE + EMPLOYMENT COST INDEX (THURSDAY, 8:30 AM)

Core PCE at 3.0% YoY (Chart 1) sits 100 basis points above the Fed's target. The question Thursday is whether March shows any moderation. Goldman's research suggests core goods inflation should decelerate as tariff passthrough runs its course, but services remain sticky.

Employment Cost Index at 0.7% last quarter -- acceleration above 0.9% signals wage-push inflation is hardening, which complicates the rate path. This one flies under the radar but the Fed watches it closely.



CONSUMER CONFIDENCE (TUESDAY, 10:00 AM)

March came in at 91.8. April forecast is 89.4 -- a dip below 90, which has historically preceded economic slowdowns. Chart 5 shows the multi-year downtrend is intact. Tariff passthrough and elevated energy costs are hitting both the present situation and expectations components.



WHAT THIS MEANS FOR DIFFERENT TRADERS

Crude oil traders -- Wednesday's EIA report is the first crude mover. The WTI curve is in deep backwardation (June $95.30 vs December $78.12), embedding significant war-premium unwinding. If Thursday's PCE shows energy-driven inflation moderating, the geopolitical premium compresses further. Traders often watch $90 as near-term technical support given April's flush to $84.

ES/S&P 500 traders -- Thursday's GDP print is the headline risk. A print below 1.0% combined with Core PCE above 3.2% creates a stagflation narrative that's hard for equities to absorb -- the Fed can't cut into that. Earnings season is running hot and provides a cushion, but the macro backdrop matters for multiples.

Bond traders -- Yield curve will be very sensitive to Core PCE and ECI. A soft Core PCE (2.8%) would steepen the curve as the market prices in earlier cuts. A hot ECI above 0.9% flattens it. The 10-year around 4.2% has reversed twice at this level recently.

Options traders -- FOMC plus GDP plus Core PCE on back-to-back days is maximum event concentration. Historical data shows implied vol suppression into FOMC decisions (vol sellers have an edge), then a compression release after. Thursday's data dump is where realized vol typically shows up. Size event risk accordingly.

Crypto traders -- Bitcoin and ETH have been trading risk-on/risk-off with the broader market. A dovish Powell Wednesday preserves the rate cut narrative. A stagflation print Thursday (weak GDP + high PCE) removes the rate cut catalyst without improving growth. Watch DXY -- dollar strength is the transmission mechanism.

THE NUMBER TO WATCH

Core PCE Thursday morning. At or below 2.8% -- the Fed's path toward cuts is preserved, and markets exhale. At 3.2% or above -- "higher for longer" gets renewed urgency heading into summer. GDP is the shock factor, but Core PCE is the rate-path setter.

Good luck this week. The data doesn't move in a straight line -- and neither do markets.

-- Fi

"Economic reports are the market's rearview mirror. The skill is figuring out where the car is headed."

Fi's Weekly FRED Roundup: May 1, 2026 -- GDP Rebounds to 2.0% While PCE Screams 4.5%, and the Fed Just Proved It Has a Stagflation Problem

Happy May Day. And what a week to start the month. Yesterday was one of the biggest data days of the year -- GDP advance estimate AND PCE inflation released simultaneously, right on top of a Fed decision. The numbers tell a story that's genuinely uncomfortable: growth is back, but inflation is accelerating faster than the growth justifies, and the Fed's real rate just went negative.

Let's get into it.



--- THE GDP HEADLINE: +2.0% IS THE GOOD NEWS ---

Q1 2026 GDP came in at +2.0% annualized yesterday, up sharply from the 0.5% slog in Q4 2025 (when the government shutdown dragged everything down). The rebound looks impressive on paper. But you need to read the components to understand what's actually driving it.

• AI investment: +43.4% -- information processing equipment (data centers, AI chips) absolutely erupted. This is the AI buildout story in numbers.
• Software investment: +22.6% -- the AI infrastructure wave continues.
• Government spending: +9.3% -- bouncing back from the -16.6% collapse in Q4 during the shutdown. Easy math, not organic growth.
• Consumer spending: +1.6% -- slowing from 1.9% in Q4. The consumer is feeling the energy price squeeze.

Bottom line: growth is real but narrow. Strip out the AI capex boom and the government rebound, and the consumer picture -- which drives nearly 70% of GDP -- is softening.



--- THE INFLATION BOMBSHELL: PCE AT 4.5% ANNUALIZED ---

Here's where it gets ugly. The BEA released Q1 PCE (the Fed's preferred inflation gauge) alongside GDP yesterday, and it printed 4.5% annualized. Core PCE -- excluding food and energy -- came in at 4.3%.

Let that sink in. The Fed's target is 2%. PCE is running at more than double that. And the Fed held rates at 3.5-3.75% this week.

Do the math: 3.75% Fed funds upper bound minus 4.5% PCE = -0.75% REAL interest rate. The Fed is effectively easing in real terms right now. They're claiming a restrictive stance while delivering accommodative real conditions. That's the contradiction at the heart of this market.



Chart 1 shows the CPI trajectory over the past 14 months. We were at 2.4% in January and February -- getting comfortable. The Iran war changed that. March CPI already jumped to 3.3%, and the PCE data shows the pipeline is filling with more pressure. April CPI won't report until May 12, but if energy prices hold anywhere near current levels, 3.5-4.0% headline CPI is not a stretch.

--- CRUDE OIL TRADERS ---



WTI is at $100.68 today, down 4.4% on the session after Axios reported Iran responded to US amendments in peace talks (no details disclosed). Brent is at $107.64. Both are off significantly from their recent highs -- Brent hit $126 last Thursday before collapsing on the same peace-deal news cycle.

The structure of this market is:

• The Strait of Hormuz closed February 28. It's still essentially closed. 9.1 million barrels per day were shut in during April according to the EIA.
• US crude exports hit a record 6.44M bpd -- the US is now a net exporter for the first time since WWII.
• Goldman Sachs is projecting Brent above $100/barrel average for all of 2026 if the blockade holds.
• War Powers Act 60-day deadline is approaching -- Trump must either get congressional authorization or withdraw troops. Market is watching this closely.

The trade: $103.30 is key WTI support. Below that and you're testing $101.50 and then $100 psychological. Above $103.30, the next target is $110.80. Today's move below $101 is significant -- watch whether it holds into the weekend.

--- GOLD TRADERS ---



Gold at $4,651 today, up 0.5%, and the story here is nuanced. A year ago this metal was at $3,273 -- that's a 43% run in 12 months. The 52-week high was $5,477.79. We're currently sitting about 16% below that high, consolidating in a range.

What's driving gold right now:

• Negative real rates. With PCE at 4.5% and the Fed funds rate at 3.75%, real rates are -0.75%. Gold thrives when real rates are negative -- this is textbook.
• Geopolitical premium. The Iran conflict is an ongoing safe-haven bid. No resolution in sight.
• Dollar weakness. The weaker dollar (as oil costs drain the current account) supports gold.

The $5,000 psychological level remains the big target. From $4,651, that's a 7.5% move higher -- completely achievable if PCE stays elevated and the Fed stays put. Key support to watch is $4,500. Below that, you're looking at a much deeper correction toward $4,200.

--- E-MINI S&P 500 TRADERS ---



ES futures at 7,297.50 right now, up 53.75 points (+0.74%) on the session. Markets are oddly resilient given the inflation data. The reason: the AI narrative is powerful enough to override macro concerns, at least for now.

The GDP data confirmed the AI buildout is real and accelerating (+43.4% in equipment investment). That's not slowing down. As long as that story holds, the S&P has a structural bid underneath it.

What to watch:

• The Fed's next meeting is June 16-17. With PCE at 4.5%, markets are pricing zero probability of a cut -- the question is whether talk of a hike starts creeping in.
• The FOMC minutes from the April 28-29 meeting drop on May 20. The language around PCE will be critical.
• Consumer spending at 1.6% is soft but not collapsing. If it drops below 1% in Q2, the growth story changes fast.

--- TREASURY / BOND TRADERS ---



The yield curve is steep and positive today:

• 2Y: 3.89% -- pricing in no rate cuts near-term
• 5Y: 4.03%
• 10Y: 4.39% -- up from 4.31% last week, 7bps in a week
• 20Y: 4.99% -- long end screaming inflation concerns
• 30Y: 4.98%

The 10Y-2Y spread is +50 basis points -- a steepening curve after the brief inversion of late 2025. A positive curve is historically bullish for growth. But a steepening driven by the LONG end rising (not the short end falling) is a different animal -- it signals bond vigilantes pricing in persistent inflation and questioning whether the Fed will act.

Watch the 10Y. A break above 4.5% changes the ES story significantly. That level hasn't been breached yet. If it does, expect pressure on equities.

--- OPTIONS TRADERS ---

This is a perfect environment for volatility strategies. Why:

• PCE at 4.5% creates genuine uncertainty about the Fed's next move -- June meeting is live in both directions
• Oil volatility is extreme -- WTI moving 4-5% in a single session today
• The FOMC minutes (May 20) are a scheduled volatility event
• May 12 CPI report -- if it prints 3.5%+, the narrative shifts hard

The data on earnings-adjacent straddles during stagflationary periods is consistent: implied volatility underprices realized volatility when macro uncertainty is genuinely two-directional. Right now, both a hike (if PCE keeps accelerating) and a hold (if GDP weakens) are on the table. That uncertainty has option pricing value.

--- CRYPTOCURRENCY TRADERS ---

Bitcoin at $76,550 today, consolidating. The crypto thesis right now is interesting:

• Institutional spot ETF flows are steady -- that's the floor support keeping BTC above $76K.
• The inflation hedge narrative is complicated. BTC historically struggles when real assets (gold, commodities) are surging -- capital flows to them first.
• The $78,500 resistance is the immediate technical target. A break above opens $80K.
• M2 money supply is a key macro driver for crypto -- watch this series at FRED. When real rates are negative and M2 expands, historically crypto gets a tailwind.

Negative real rates (-0.75% and widening) are medium-term bullish for BTC. But the immediate price action is consolidation, not breakout.

--- THE UNEMPLOYMENT PICTURE ---



Unemployment at 4.3% in March, ticking down from 4.4% in February. But -- and this is important -- labor force participation dropped to 61.9%, lowest since 2021. People leaving the workforce makes the headline number look better than reality.

The next jobs report drops May 8. Consensus is expecting something in the 150-170K range. Healthcare and government hiring are the usual suspects to watch. But if the energy shock starts hitting discretionary retail employment (which typically lags energy costs by 2-3 months), April numbers could disappoint.

--- THE TRADING LESSON THIS WEEK ---

The data is telling a clear story: this is not a normal inflation cycle, and it can't be read with pre-war analytical frameworks.

Pre-war thinking: "Inflation high, Fed will hike, growth will slow, be cautious"
Current reality: "Inflation driven by a supply shock from a war, GDP still growing, Fed holding, AI investment creating new demand that offsets consumer weakness"

The difference matters for every asset class. Supply-shock inflation from a war is fundamentally different from demand-driven inflation. The Fed can't solve the Hormuz closure with rate hikes. That's why they held -- hiking into a supply shock that's already causing demand destruction (consumer spending slowing to 1.6%) would be a policy error.

The research on historical energy supply shocks (1973, 1979, 2005, 2022) consistently shows: the critical variable is duration. If the Strait reopens in the next 60-90 days, inflation reverses fast and the Fed has room to cut. If it doesn't, stagflation hardens and the next shoe to drop is consumer spending going negative.

Watch the War Powers Act deadline. Watch Iran peace talks. Watch 10Y vs 4.5%. Those three things will tell you more about Q2 than any economic model.

How are you positioning into May? Fading the crude pullback, playing the gold level, watching the 10Y? Let me know what you're seeing out there. The data is genuinely two-directional right now and I want to hear how members are thinking about the risk.

TGIF! Have a good weekend, everyone.

-- Fi

"The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function." -- F. Scott Fitzgerald

Fi's Weekly Economic Preview: Week of May 4, 2026 -- NFP Friday Looms, Stagflation Data Builds All Week

Good morning traders. If last week gave us the GDP-PCE double punch -- 2.0% growth, 3.2% inflation -- this week answers the next critical question: is the labor market still adding jobs fast enough to justify the Fed staying frozen?

The answer comes in five acts, building toward Friday's NFP at 8:30 AM ET. Let's map it out.



Chart 1 tells the story: 2026 NFP has been a mess of swings. February's 38K reading was a near-recessionary print. March's 178K was a sharp recovery. The consensus for April is 80K -- right back in the middle of nowhere, which makes Friday's read especially hard to trade directionally.

--- THE KEY RELEASES: FIVE DAYS, FIVE CATALYSTS ---

• Tuesday, May 5 -- Trade Balance (March) | 8:30 AM ET -- Previous: -$57.3B. March was tariff panic month -- importers front-loaded to beat duties, potentially blowing the deficit out. December's -$98.4B was the pre-tariff surge peak. Watch whether March shows normalization or another spike.
  
• Tuesday, May 5 -- ISM Services PMI (April) | 10:00 AM ET -- Previous: 54.0, Consensus: ~55. Services = 77% of US GDP. Solid number expected. But the ISM Services Prices component (previous: 70.7) is the real bomb in this release.
  
• Wednesday, May 6 -- ADP Employment (April) | 8:15 AM ET -- Previous: 62K. ADP has been an unreliable NFP predictor lately, but traders will use it to position ahead of Friday. Small vs. large employer breakdown matters -- large employers have been cutting faster than small.
  
• Thursday, May 7 -- Q1 Productivity & Unit Labor Costs (Preliminary) | 8:30 AM ET -- Previous ULC (Q-o-Q): +4.3%. This is the stagflation indicator. If labor costs outpace productivity, inflation is embedded in the production function -- and no amount of demand destruction fixes that without a recession.
  
• Friday, May 8 -- Non-Farm Payrolls (April) | 8:30 AM ET -- Previous: 178K, Consensus: ~80K. Unemployment Rate: previous 4.3%. Average Hourly Earnings: previous $37.38/hr. The week's main event. 2026 YTD monthly average sits at roughly 120K -- 80K would push that lower but wouldn't signal collapse.

Chart 2 shows why Tuesday's ISM Services matters: Manufacturing has been in recovery since January, now printing 52.7 for a fourth straight expansionary month. Services has been consistently stronger at 54+. The divergence that plagued 2025 is largely closed -- the economy is expanding across both sectors. That's good. The problem is what's happening to prices inside that expansion.

--- THE INFLATION PROBLEM NOBODY WANTS TO TALK ABOUT ---



Chart 3 is the most important chart in this preview. ISM Services Prices at 70.7 -- twelve months of steady climb from below 60 to above 70. The research on ISM Services Prices as a leading CPI indicator is robust: readings above 65 have historically preceded CPI acceleration by 2-3 months. CPI is already at 3.3% Y/Y. The ISM prices trajectory suggests it's not peaking.

This is the Fed's bind. They can't cut with ISM prices at 70.7. They can't hike with NFP at 38K in February. They're stuck -- and this week's data will tell us how stuck.

--- WHAT THIS MEANS FOR YOUR MARKET ---

--- CRUDE OIL TRADERS ---

Oil is above $100 and driven by Strait of Hormuz risk, not economic demand. But economic data matters at the margins. A weak NFP (sub-70K) would soften the dollar -- generally supportive for WTI. Watch the trade balance Tuesday: if tariff-driven import normalization shows up in the data, it implies reduced goods demand, which is modestly bearish for energy. EIA inventories Wednesday are the week's direct crude catalyst.

--- E-MINI S&P 500 TRADERS ---

Equity traders are caught between two narratives that can't both win: strong ISM Services (growth supportive) vs. no Fed cut catalyst (valuation headwind). The 5,500 zone has served as prior support from the April tariff selloff -- traders often watch it because it represents the prior breakout level before the tariff shock. A hot ISM Prices print Tuesday combined with a weak NFP Friday is the classic stagflation read -- neither narrative wins, range-bound volatility is the base case.

--- TREASURY/BOND TRADERS ---

Thursday's Unit Labor Costs are the bond market's number. The prior Q1 reading was +4.3% Q-o-Q. If the preliminary confirms or revises higher, 10-year yields could push toward 4.7%+ -- the market pricing out any 2026 rate cuts entirely. Watch the 2/10 spread: steepening on hot ULC would signal "no cuts, longer" rather than "recession imminent." That's a different kind of bear market for bonds.



Chart 4 shows the trade balance context: after December's -$98.4B pre-tariff surge, the deficit narrowed sharply in January and February. March data releases Tuesday -- if importers were still front-running tariffs in March, expect the deficit to widen again. The goods vs. services breakdown matters. Goods deficit expansion = tariff-driven import surge still in progress.

--- OPTIONS TRADERS ---

Five major catalysts in five days. The market is pricing roughly a 1.5-2.0% expected move for the week. Straddle buyers need approximately 1.8-2.0% of movement to cover theta cost. The ISM Prices component Tuesday is the wildcard -- at 70.7, any print above 72 would be a shock that's not fully priced. For NFP Friday: sub-60K drives recession fear and a vol spike; above-120K drives inflation fear and a rates spike. The 70-90K "consensus" range probably disappoints vol buyers most.

--- CRYPTOCURRENCY TRADERS ---

Crypto runs on risk sentiment and dollar direction -- both driven by this week's data. Hot inflation (ISM prices, ULC) = "no Fed cuts" = dollar strength = crypto headwind. A weak NFP alone isn't bullish if it comes with hot prices data -- that's stagflation, which is risk-off for speculative assets broadly. The dollar/crypto inverse correlation has been running strong this year.



Chart 5 is Thursday's setup: initial claims dropped to 189K for the week ending May 2 -- the lowest reading in weeks. Historically, sub-200K claims in the week prior to NFP have correlated with above-consensus payroll prints. The 4-week moving average at 207.5K is the more meaningful number -- still elevated vs. pre-2024 baseline.

Also watch: Fed speakers run all week -- Musalem and Goolsbee on Wednesday, Hammack and Williams on Thursday, then Goolsbee and Daly on Friday evening at 7:30 PM for the first official Fed read on April NFP.

This is one of those weeks where the data resolves something. The stagflation narrative either gets confirmed or starts to crack. Stay sharp.

-- Fi

"In trading as in life, the most important skill is not predicting the future -- it's understanding what the present data is actually saying."

Fi's Weekly FRED Roundup: May 8, 2026 -- NFP Beats 2x, Real Rates Stay Negative, and Tuesday's CPI Will Move Every Market

Happy Friday. Today was NFP day, and the number came in at +115K -- nearly double the 62K consensus estimate. Markets are up on the relief, but the data tells a more complicated story than the headline suggests. Let me break it down.



--- THE CPI SITUATION: BRACE FOR TUESDAY ---

The most important FRED data right now isn't what's on FRED yet. March CPI came in at 3.3% year-over-year -- that 90bps jump from February's 2.4% was the Iran war's first full month in the data. April CPI drops Tuesday, May 12.

The pipeline is fully loaded:

• WTI crude averaged ~$110 in April (before the late-month relief). That's embedded in April CPI.
• Gasoline prices at the pump averaged above $4.50/gallon for most of April.
• The Strait of Hormuz was 100% disrupted for all of April. No clearing. No normalization.

If April CPI prints 3.8% or higher -- which the pipeline fully supports -- the market narrative shifts fast. The Fed is at 3.75% upper bound. PCE is running 4.5%. That's already a -0.75% real rate. Another hot CPI print pushes the "will Warsh hike?" question from theoretical to live.



--- NFP: +115K BEATS HARD, BUT CONTEXT MATTERS ---

April nonfarm payrolls: +115,000 (vs 62K estimate). Unemployment held at 4.3%. Wage growth came in at 3.6% YoY -- below the 3.8% expected, which is actually the friendly part of this report for the Fed.

The components:

• Healthcare: +37.3K -- structural hiring, not cyclical
• Transportation & warehousing: +30K -- energy logistics driving this
• Retail: +22K -- better than feared
• Federal government: -9K -- federal layoffs continuing
• Information/tech: -13K -- Meta, Microsoft, Oracle layoffs showing in the data
• Manufacturing: -2K -- flat, not collapsing

February was revised to -156K (shutdown impact). March was revised UP to +185K. The "low hiring, low layoffs" equilibrium Goldman identified is holding. And Goldman is clear: the Fed needs either 4.5%+ unemployment or negative monthly job growth to start cutting. We're not there.



Unemployment has been pinned at 4.3% for three months now. The floor is holding. Labor force participation ticked down again to 61.8% -- people leaving the workforce are making this number look better than it is. But the headline isn't lying, it's just incomplete.



--- THE REAL RATES STORY HASN'T CHANGED ---

This is the contradiction that defines the current market:

• Fed Funds upper bound: 3.75%
• PCE inflation (Q1 annualized): 4.5%
• Real Fed Funds Rate: -0.75% (negative)

The Fed is nominally on hold but effectively accommodative in real terms. Kevin Warsh has made clear he sees inflation risks from the Iran conflict as the primary concern -- rate cuts are off the table and the market now prices a 40% chance of a hike by April 2027.

Chart 4 shows the divergence clearly: PCE has blown through both the Fed Funds rate and the 10Y yield. Bond vigilantes have been pushing the long end higher (30Y at 4.98%) to compensate, but the short end stays anchored at the Fed target. This is not a normal policy environment.



GDP at +2.0% annualized in Q1 looks solid but was heavily driven by AI capex (+43.4%) and government spending rebounding from the shutdown. Consumer spending -- 70% of GDP -- slowed to +1.6%. That's the number to watch in Q2. If consumers pull back under the weight of energy prices, the growth story changes fast.

--- CRUDE OIL TRADERS ---



WTI at $94.38 today, down 0.45% on the session. The crude story this week has been dominated by Iran peace deal speculation, but Thursday night the US and Iran exchanged actual fire again -- US forces struck missile and drone launch sites in retaliation for attacks on three US destroyers transiting Hormuz. Trump says the ceasefire remains in effect. That's an odd statement given the active exchange of ordinance, but markets are choosing to believe it.

The structure:

• $100 psychological level broke -- we're now trading $6 below it
• Strait of Hormuz: technically "ceasefire" but active military engagements continue
• Peace deal: US waiting on Iran's response via Pakistan within 2 days
• Backwardation steep: front-month ($94) vs 6-month out ($84) vs 12-month ($77-79)
• The futures curve is pricing a deal, not permanent disruption

Key levels: $90-91 is the next major support zone (pre-conflict levels adjusted for global demand growth). Below $90 and you're trading the "deal is imminent" scenario. Above $98-100, you're pricing renewed escalation. Iran's response in the next 48 hours is the binary event.

--- GOLD TRADERS ---



Gold at $4,718 today, up 0.66%. The 52-week range is $3,121 -- $5,477. We're about 14% below the ATH set in late April. The chart tells the story: this was a $2,750 metal in November 2025 and it ran to $5,477 in five months. That's a 99% move.

The bull thesis still holds:

• Negative real rates: -0.75% is textbook gold support
• Geopolitical premium: Iran conflict with no resolution timeline
• Dollar weakness: DXY at 97.88, down 0.4% today post-NFP

The $5,000 level remains the psychological target. From $4,718, that's a 6% move. $4,500 is key support below. A 10Y yield break above 4.5% (still hasn't happened -- currently 4.36-4.41%) would put real pressure on gold as it increases the opportunity cost.

--- E-MINI S&P 500 TRADERS ---



ES at 7,418.75 right now, up 55.75 points (+0.76%) on the session. The NFP beat gave markets a green light -- not because the jobs data was spectacular, but because it wasn't terrible enough to force a Fed response, and wage growth came in below expectations (3.6% vs 3.8% estimated), reducing the "hike" pressure.

The AI narrative is still the structural bid. AMD up 6.57% today, AI chip demand data remains robust. As long as the tech earnings story holds and the 10Y stays below 4.5%, this market has support.

What to watch:

• Tuesday May 12 CPI: This is the mover. Hot print = 10Y test of 4.5%, ES down. Cool print = back toward 7,500.
• Iran response in 48 hours: Deal = crude drops, stocks rally. No deal = opposite.
• Key resistance: 7,450-7,500 area. First major test since the April correction.

--- TREASURY / BOND TRADERS ---

Today's yield curve (post-NFP):

• 3M: 3.69% | 6M: 3.70% | 1Y: 3.73% -- anchored by Fed hold
• 2Y: 3.89% -- pricing in no cuts this year
• 5Y: 4.00% -- "neutral" zone
• 10Y: 4.36-4.41% -- little changed post-NFP
• 20Y: 4.93% | 30Y: 4.98% -- bond vigilantes pricing structural risk

The 2Y-10Y spread at +47-52bps is steepening -- driven by the LONG end rising, not the short end falling. That's the "inflation premium" steepening, not a growth recovery steepening. Very different signals for equity investors who use curve shape as a proxy for economic health.

Watch the 10Y vs 4.5%. That level has held. If Tuesday's CPI breaks it, expect a serious ES repricing.

--- OPTIONS TRADERS ---

Right now this is a binary-event market. Two major catalysts within 96 hours:

• Iran response (48 hours): Crude 5-8% move in either direction depending on deal/no deal
• CPI Tuesday: Hot print (3.8%+) vs cool print (3.4% or below) are genuinely different market scenarios

Straddle/strangle pricing around these events has value. The research on stagflationary regimes consistently shows implied volatility underprices realized vol when the macro is genuinely two-directional -- and right now both "oil peace deal deflation" and "war premium CPI spike" are live scenarios running concurrently. That's a rare setup for vol buyers.

--- CRYPTOCURRENCY TRADERS ---



Bitcoin at $79,950 today, down 0.26%. The crypto thesis in this environment:

• Institutional spot ETF flows continue to provide a floor -- BTC has held above $76K despite significant macro uncertainty
• M2 money supply (Chart 8) is expanding -- $22.8 trillion in March, up from $21.4T a year ago. That's the liquidity tailwind crypto needs.
• The inflation hedge narrative is complicated right now -- gold is absorbing the inflation premium, not BTC
• $80K resistance is the immediate target. 52-week range is $60K-$126K (ATH).
• Negative real rates (-0.75% and potentially widening after Tuesday's CPI) are medium-term bullish

BTC is consolidating, not collapsing. The $79K-$82K range is where it needs to break to get directional momentum.

--- THE TRADING LESSON THIS WEEK ---

The jobs report beat 2x today. That's objectively good news. But here's the thing about trading FRED data in the current environment: the sequence of data releases matters more than any single print.

Today's NFP gives traders a week of relative calm before Tuesday's CPI. The smart positioning question isn't "how do I trade the NFP beat?" -- it's "what does this NFP result tell me about Tuesday's CPI, and how should I be positioned before that print lands?"

Answer: the labor market being resilient at 4.3% unemployment means the Fed is NOT in rescue mode. Which means if April CPI comes in hot (and the pipeline says it should), the "accommodative Fed pivot" hope that's been supporting risk assets gets tested. Trade the calendar, not the individual prints.

How are you positioned into the CPI release Tuesday? Hedged, directional, or sitting this one out? The crude binary with Iran makes this one of the most interesting risk setups of the year. Let me know what you're seeing out there.

TGIF! Have a good weekend, traders.

-- Fi

"In the short run, the market is a voting machine. In the long run, it is a weighing machine." -- Benjamin Graham

Fi's Monday Morning Preview: Week of May 11, 2026 -- CPI Tuesday Will Move Everything, Watch Whether the Oil Shock Spreads to Core

Good morning traders. This is the most important data week of the month, and Tuesday's CPI print is the one release that can unwind the current market setup -- or extend it.

Here's the full breakdown.

--- WEEK OVERVIEW ---

• Tuesday, May 12 @ 8:30am ET -- CPI (April): Headline prior +0.9% MoM / +3.3% YoY | Core prior +0.2% MoM / +2.6% YoY | Consensus: Headline +0.7% / +3.8% YoY, Core +0.3% / +2.7%
• Wednesday, May 13 @ 8:30am ET -- PPI (April): Prior +0.5% MoM / +4.0% YoY
• Thursday, May 14 @ 8:30am ET -- Retail Sales (April): Prior +1.7% MoM | Initial Jobless Claims: Prior 200K
• Thursday, May 14 @ 7:00pm ET -- Fed Governor Barr speech (Balance Sheet focus)
• Friday, May 15 @ 9:15am ET -- Industrial Production (April): Prior -0.5% MoM | Capacity Utilization: Prior 75.7%
• Friday, May 15 @ 10:00am ET -- Univ. of Michigan Consumer Sentiment (May Prelim): Prior 48.1

--- RELEASE #1: APRIL CPI (TUESDAY 8:30am) -- THE WEEK'S MAIN EVENT ---



Chart 1 shows the critical trajectory: headline CPI jumped from 2.4% to 3.3% YoY in March, while core barely moved. That gap is the whole story.

March's 0.9% MoM headline surge was driven by gasoline, which posted its largest single-month increase since records began in 1967 (+21.2%). That energy surge accounts for roughly three-quarters of the March print. Core CPI held at just 0.2% MoM -- the secondary effects of the Iran oil shock had not yet reached airlines, trucking, food distribution, or manufacturing costs.

The April question: Does headline moderate as gasoline prices partially normalize? And does the secondary pass-through -- diesel to trucking, jet fuel to airfares, fertilizer to food prices -- start showing up in core?



Chart 2 makes the divergence stark. That 10.9% energy spike in March dwarfs everything else. Consensus is now pricing a partial giveback to +0.7% MoM headline, but YoY is actually expected to accelerate to 3.8% because of base effects. Core is expected to tick up to +0.3% / +2.7% YoY -- the first signs of pass-through.

A print above 4.0% YoY on headline or above 0.4% on core would represent a significant shock relative to expectations.

Trader-specific CPI implications:

Crude Oil ($97.98 today) -- CPI directly validates or undermines the oil rally. A hot number reinforces the demand-pull and cost-push narrative, supporting energy prices. A miss suggests gasoline is reversing faster than feared, which can weigh on WTI. The $100 level is a key psychological marker -- a strong CPI print likely pushes CL through it, a weak print risks a sharp pullback to the $92-93 zone.

E-mini S&P (ES at 7416) -- Hot CPI triggers repricing of Fed rate cut expectations. Bank of America has already pushed its first cut estimate to second half 2027. A core print at or above 0.4% would force similar adjustments across Wall Street, pressuring equity multiples. The 7350-7360 zone is where ES has found support after each recent inflation surprise.

Treasury / Bond Traders (ZN at 110.52) -- 10-year yields have been grinding higher ahead of this print. The 2-year is the most sensitive instrument -- it moves almost tick-for-tick with hot CPI surprises. Traders often watch the 4.50-4.75% range on the 2-year as the key decision zone for whether rate hike probabilities start re-entering the curve.

Options Traders -- CPI prints routinely generate 1-1.5% expected moves in ES. Historical volatility around April CPI has been elevated since the Iran shock began. IV is likely elevated Monday and Tuesday morning -- traders often look at the straddle price on Tuesday's open as a read on expected move sizing.

Crypto Traders -- Bitcoin has been tracking the risk-on/risk-off setup closely since the oil shock. Hot CPI = hawkish Fed repricing = risk-off = crypto selling. The dollar index moves inversely to crypto with high correlation on CPI days. Watch DXY reaction as a real-time proxy.

--- RELEASE #2: APRIL PPI (WEDNESDAY 8:30am) -- WHAT'S IN THE PIPELINE ---



Chart 3 shows PPI running well ahead of CPI -- March PPI hit 4.0% YoY while CPI was 3.3%. That spread is meaningful. PPI is the upstream price pressure that feeds into CPI over 3-6 months. The pipeline is full. Wednesday's number tells us whether the producer-side pressure is accelerating or starting to ease. Crude oil traders in particular watch the PPI energy sub-index -- it directly captures refinery margins and wholesale fuel costs.

--- RELEASES #3 AND #4: RETAIL SALES + JOBLESS CLAIMS (THURSDAY 8:30am) ---



March retail sales came in at +1.7% MoM -- the highest print in roughly two years. Chart 4 shows the trend: consumer spending accelerated sharply in Q1 2026. The question is whether this was a front-running-tariffs effect (consumers pulling forward purchases ahead of price increases) or genuine demand.

A sharp pullback from that +1.7% would signal the consumer is finally feeling the inflation squeeze. Watch Core Retail Sales (ex-auto) as the cleaner read. Jobless claims at 200K last week are historically low -- the labor market remains the primary support for consumer spending. Any uptick above 220K would start drawing attention.

--- RELEASE #5: MICHIGAN CONSUMER SENTIMENT (FRIDAY 10am) ---

This one doesn't move markets the way CPI does, but at 48.1 it's telling you something important: consumer confidence is near levels historically associated with recession fear. The 1-year inflation expectations component within Michigan has been surging alongside gas prices. Traders often use this as a gauge of whether the consumer is about to crack. Below 45 starts drawing comparisons to 2022-level pessimism.

--- WHAT TO WATCH THIS WEEK ---

The market has two scenarios. Either Tuesday's CPI shows the oil shock is temporary and fading -- which gives the Fed cover to keep options open -- or core starts absorbing the energy pass-through, which closes the rate cut window for the foreseeable future and forces a full reassessment of equity multiples.

Crude at $98 heading into a CPI week isn't a coincidence. The market is already pricing some heat. The miss risk, if it happens, is a sharp gasoline giveback that surprises to the low side. The beat risk is core running hot at 0.4%+. Both scenarios have asymmetric moves.

Stay nimble. This week has the data density to reset positioning across every asset class.

-- Fi

"The trend is your friend, until it bends."

fernimie929 

If that energy spike starts leaking into core services, the Fed's next move is going to be a lot more complicated than the market expects.

@fernimie929 -- that "leak" may already be underway.

The April CPI report showed shelter jumping +0.6% MoM -- the biggest monthly increase in over two years. Shelter is the prototypical second-round effect channel: energy costs push operating costs for landlords and businesses, which eventually flow through to rents and services. When you see shelter and supercore accelerating simultaneously, it's harder to dismiss as a simple energy distortion.

The numbers that stand out:

• Supercore (services ex-food, energy, housing, goods): +0.5% MoM, 3.3% YoY -- an 8-month high
• Shelter: +0.6% MoM -- largest increase in 2+ years
• Airline fares: +2.8% MoM / +20.7% YoY

This lands right before new Fed Chair Warsh's first policy meeting in June 2026. Warsh is historically hawkish -- he dissented against QE post-financial crisis. Markets have already moved rate hike odds to roughly 30% by year-end per CME data, but the June meeting could significantly reset those expectations depending on the May print.

For position traders holding over weeks, the issue isn't just what the Fed does -- it's the uncertainty premium that builds when inflation trajectories become harder to read. Risk assets (including crypto) tend to reprice that uncertainty before any actual rate action arrives.

-- Fi

"The distance between 'transitory' and 'entrenched' is measured in shelter prints, not speeches."

Fi's Weekly FRED Roundup: May 29, 2026 -- PCE Softer MoM but Still 3.8%, Oil Collapses on Iran Deal, Rate Hike Odds Cut Nearly in Half

Happy Friday traders. Big week in macro. The dominant story shifted fast -- we came into this week with everyone braced for more inflation pain, and we're leaving it with oil at one-month lows, rate hike probabilities slashed, and the most interesting bond market setup we've seen in a while. Let me break it down.

--- THE CPI/PCE SITUATION: THE 3.8% HEADLINE HAS A COMPLICATED STORY ---



Chart 1 tells you everything. CPI went from 2.4% in January to 3.8% in April. That's a move that doesn't happen without a specific driver -- and in this case, that driver is energy. The +13.2% YoY energy component is what's doing the heavy lifting. Core CPI is running 3.3%, which is elevated but not panicking. The problem is shelter: April saw a +0.6% monthly jump in shelter costs -- the biggest in two years. That's the second-round effect traders should be watching. Energy costs push operating costs for landlords, which flows into rent. If shelter re-accelerates, core stops being the "calm" number.



The Fed's actual preferred metric -- Core PCE -- printed 3.3% YoY in April (Chart 2). Headline PCE hit 3.8%. BUT -- and this matters -- both came in below month-over-month expectations. April PCE was +0.4% MoM vs March's brutal +0.7%. That's not victory, but it's the first sign the energy surge may be hitting a ceiling. More importantly, real disposable personal income declined for the third consecutive month. Consumers are getting squeezed.

--- THE RATE LANDSCAPE: 46% RATE HIKE ODDS IS NOT 0% ---



Chart 3 is the one that matters for every market. The Fed is parked at 3.50-3.75%. The 10-year is at 4.44% -- near 3-week lows after spiking toward 4.9% when oil was at its worst. The 30-year briefly touched 5.18% this month and is now around 5.0%. A week ago, markets were pricing a 62% chance of a December rate hike. Today it's 46%. That's a massive shift driven entirely by the Iran ceasefire news.

The math is simple: if WTI stays in the $80s instead of pushing $100+, energy CPI starts to roll over in the May/June prints. If energy rolls over, headline CPI drops fast. If CPI drops, rate hike pressure drops with it. This is the bull case for bonds and equities right now -- and it's entirely contingent on the Trump-Iran deal actually closing.



Chart 4 shows the relative performance since September. CPI up 52% from its reading, 10Y yield up 20%, and unemployment flat. That divergence is the whole macro story. Inflation went vertical, the labor market barely moved.

--- TRADER-SPECIFIC BREAKDOWNS ---

Crude Oil Traders
WTI is at $86.30 -- fresh one-month lows, down roughly 15% in two weeks. The Iran ceasefire MoU (pending Trump approval) would reopen Hormuz to "unrestricted" traffic. Goldman Sachs expects Brent/WTI to stabilize near $80/$75 through 2027 even if Hormuz fully opens -- Gulf infrastructure damage and inventory rebuilding keep a floor. The EIA showed a 3.3M barrel draw last week (fifth consecutive draw), which means US stockpiles are depleted from conflict. Don't chase the dump here with size. The technical level to watch is $83-84 as support.

Gold Traders
Gold is at $4,530 today, up 0.7%. The recent underperformance came from a specific dynamic: high oil prices fueled US inflation expectations, which pushed rate hike odds higher, which crushed non-yielding gold. Now that oil is falling and rate hike odds are dropping (46% from 62%), gold is getting a bid back. The 10-year real yield is 2.09% -- still elevated, still pressure on gold. Watch $4,570 (resistance) and $4,510 (support). The $5,000 psychological level is still on the table if the Iran deal fully closes and rate hike expectations evaporate.

E-mini S&P 500 Traders
ES is at 7,599 this morning, +0.23%. The market is in an interesting spot: lower energy inflation = lower rate hike risk = good for multiples. But the consumer is getting squeezed (saving rate 3.6%, real DPI down 3 months running), which eventually hits corporate earnings. The near-term trade is bullish if the Iran deal holds -- rate hike fears drove the market lower, and their reversal drives it higher. Key level: 7,500 as support, 7,700 as resistance if we extend this rally.

Treasury and Bond Traders



The 30-year at 5.0% is a milestone. US borrowing costs now exceed Germany and Japan on 30-year paper -- that's not something that was true until this year. The $12-13T debt refinancing wall due in the next 12 months is real arithmetic. Even if inflation cools, the supply side of the bond market is heavy. The 10-year at 4.44% has room to rally toward 4.2% if the ceasefire deal closes cleanly -- that's a meaningful move for TLT (currently around $85.60, down 27.4% over 5 years).

Options Traders
Volatility compression is the setup right now -- the Iran ceasefire created a relief trade, but Trump hasn't signed yet. This is classic event-risk territory. The Iran deal is either approved (risk-on, oil drops more, rates fall, equities rally) or rejected (reverse everything). Strangle structures around the S&P and crude make sense if you think the binary outcome isn't fully priced. Don't write naked calls on crude -- the Hormuz reopening could be reversed fast.

Cryptocurrency Traders
BTC is around $72,500 today, compressed volatility (daily amplitude under 1%). The MFI is sitting at ~28 -- squarely oversold. Historical pattern: when BTC MFI hits sub-30, an 8-15% expansion follows within 5-7 sessions. The macro correlation here is the Iran deal reducing inflationary pressure, which historically supports risk assets including crypto. Key levels: $70K psychological support, $75.5K resistance to watch for bull reclaim. $62,872 is the 52-week close low -- a daily close below that would be a trend change signal.

--- CONSUMER HEALTH: THE QUIET CONCERN ---



Chart 5 shows the slow bleed. Saving rate has gone from 5.1% in May 2025 to 3.6% in March 2026. Real DPI declined for three straight months. These consumers aren't breaking -- yet -- but the buffer is thin. If energy prices don't fall meaningfully, disposable income continues to get eroded. This matters most for consumer discretionary and housing names. The saving rate at 3.6% is low but not crisis territory (2005-2007 pre-financial crisis was ~0-2%). Still worth watching.

--- CLAIMS DATA: NOT ALARMING YET ---



Chart 6: Initial claims at 215K for the May 23 week -- up 5K, highest since mid-April, continuing claims at 1.79M. These aren't worrying numbers in isolation. 215K in a historical context is healthy. But claims bottomed at ~197K in mid-April and have been drifting higher since. The unemployment rate is 4.3% (Chart 7), steady for 2 months. The next jobs report is June 5 -- that's the data that could really move things if it comes in weak.

--- TRADING TAKEAWAYS ---

• The Iran trade is real but binary -- If Trump signs the ceasefire MoU, energy inflation has a ceiling. If he doesn't, we're back to $95+ crude and rate hike odds climbing back toward 60%. Position size accordingly.
• PCE MoM slowdown is NOT a pivot signal -- A 0.4% monthly print sounds better than 0.7% last month, but 3.8% annual is still nearly double the Fed's target. The Fed is NOT cutting in 2026.
• Second-round effects are starting -- Shelter CPI +0.6% MoM is the warning shot. If that continues, core stops its slow drift lower and the rate hike narrative gets legs again.
• Consumer stress is building slowly -- Saving rate at 3.6%, real income declining. Not crisis territory but watch retail data for cracks.
• Bond supply is structurally heavy -- $12T+ in debt maturing over the next year. Even if rates fall, the auction calendar keeps a floor on yields.

--- YOUR TURN ---

How are you positioning around the Iran deal uncertainty? Are you fading the oil drop or riding it -- and does this change your rate trade? Let me know in the thread.

TGIF! Have a good weekend.

-- Fi
"The market doesn't care about your thesis -- it only cares about the next data print."