To The Moon

$SPDR S&P 500 ETF Trust(SPY)$ Bullish

33.5% gain from taking calls on SPY from the positive news from the banking sector as reported by the Fed Chair in Europe on Thursday. ⚠️ Trading tips: Looking at calls above 439.06 and puts below 437.37 on the last trading day in June. PCE data at 8:30 am will swing the market.

Traders could draw encouragement from the positive results of the Federal Reserve’s bank stress test and a few strong earnings reports. With two sessions to go for the end of the half year, the averages look set to close the period on a buoyant note.

Go with the flow 🤑

Powell spoke at the Banco de Espana’s fourth conference on Financial Stability, in Madrid Spain early Thursday, in which he discusses the economic situation and the stresses that emerged in the U.S. banking system.

The chairman stressed on inflation remained well above the Fed's long-run goal of 2%. He delved into the banking crisis that rocked regional banks earlier this year and warned against remaining complacent about the financial system's resilience.

PCE Inflation Vs. Core PCE Inflation

The Federal Reserve’s preferred measure of inflation, the personal consumption expenditure (PCE) price index for the month of May, will be released Friday.

Investors are on edge as they eagerly anticipate the unveiling of the PCE inflation figures following a sudden shift in sentiment caused by a surprisingly hawkish Fed Chair Jerome Powell and robust economic indicators this week.

The analyst consensus estimate calls for PCE inflation to sharply decline from 4.4% year-on-year in April to 3.8% in May. If expectations hold, PCE inflation will fall to its lowest level since April 2021, more than two years ago.


On a monthly basis, the PCE price index is expected to have increased by 0.1% in May, a sharp deceleration from the 0.4% increase recorded in April. The underlying measure of the PCE, or core PCE, which excludes both energy and food items from the basket, is seen as stable at 4.7% year on year.

What about us?

Since the Fed has recently alluded to paying more attention to services ex-housing inflation in order to evaluate inflation stickiness, the core PCE inflation rate will be of particular importance for investors Friday.

On a monthly basis, the core PCE inflation is expected to have surged 0.3% in May, somewhat lower than the 0.4% advance in April.

The consumer price index (CPI) came in at 4%, down from 4.9%, while core CPI inflation was 5.3%, down from 5.5%.

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As we approach this data release, investors have already upped their bets on a 25-basis-point hike by the Fed in July, placing an 87% probability, according to the latest CME Group FedWatch Tool. Speculators are also increasing their bets on a possible back-to-back hike in September, assigning a 24% probability to this outcome.

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