Morning Notes — May CPI and Our Bullish Trigger

The S&P 500 should remain above technical support at ~3,850 as long as 10-year inflation breakeven yields remain below 283bp.  Ten-year breakeven yields are up 2bps to 279bp today and terminal Fed expectations (June ’23) remain below levels from May.  The recipe for a sustained rally includes equal parts of lower inflation expectations and lower Fed rate expectations.  Ten-year breakeven yields tend to lead Fed fund futures by a few days, with anything lower than 256bp as our bullish trigger.