RobertTimper

And finally, amidst the bond market yield debate (where QT, Gilt issuance, political risk, Brexit, and inflation expectations are all playing interdependent roles) the cumulative picture of UK price growth - versus benchmark economies - helps the additional yield premium demanded on GBP debt. Consumer prices have risen 31% since January 2020.

David Friedberg: El Niño Could Trigger a Global Food Crisis “This Science Corner is about the dreaded El Niño season that is coming up. Ocean temperatures are going to exceed anything we have seen in recent history. Why does this all matter? The reason is the oceans are the battery of weather. And at this point, there is so much excess energy stored up in the oceans, it's about 11 million terawatt-hours. That's 500 years worth of human energy in this ocean. And over the next few months, that energy's going to be released into the atmosphere. 99% confidence that will make the upcoming year the hottest year on record by far that humans have ever experienced. Southern Argentina, Chile, Brazil could see record-shattering heat waves, and this is where things start to get a little nasty, because when that happens, the crops start to fail. Hundreds of millions of people depend on the exports out of Brazil, Brazil is the world's largest ag exporter. And the scariest one of all is if the monsoons fail, which is now a very high probability event in India. 150 million farmers in India, and 1.5 billion people that depend on that food. If you think about the second and third order effects of this, over the next year you could see energy prices spiking, and electricity spiking, and the grid failing in parts of the Southwest. Commodity prices spiking all over the world. And then you would see places like India, the Philippines, Vietnam starting to face some sort of unrest if there isn't enough food supply that's coming into those markets. And then the question in India is a really nasty one because there isn't a really good solution.”

Despite the political turmoil and headlines in the UK, the gilt market has barely reacted to the risk of more fiscal spending. Yields have risen globally due to higher oil prices. The US/UK yield differential has been stable and largely driven by relative policy expectations.

The Cleveland Fed's median CPI was +0.40% in April, or 4.9% annualized. The 12-month median CPI ticked up to 2.8%, the first such increase since last summer. (The median CPI looks at the price change of the item sitting in the middle of the basket each month, which strips out the outliers that can distort core CPI.)

Just when you thought this cycle couldn't get any crazier, our Labor Gauge, which aggregates all of the major labor releases, has shot upwards after today's data:

The effect of last week’s yen intervention is already fading, with JPY/USD at 158. The real “intervention” necessary is BoJ rate hikes. 2-Year real yields are negative again, while rising long-term inflation expectations are hurting the yen. It’s time for BoJ hikes.