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- Market Is Braking Gently (Plus CPI Review)
Market Is Braking Gently (Plus CPI Review)
Daily Update on SPY, QQQ, TLT, USO, BTC, COIN, Mag-7, Gold, PLTR
Yimin Xu
June 12, 2025
Hi YXI friends,
CPI on Wednesday came in lower than expected in both the Headline and Core figures. While this is good news for the Fed’s mandate of price stability, the Fed is unlikely motivated to act just yet. There is virtually no chance of a new rate cut in next week’s FOMC, with July also looking unlikely.
While the broader market remains in a risk-on stance, equities are approaching some key technical levels right now. We can sense that by the slowing momentum in the latest rallies, as if a car is braking gently ahead of the red light.
I personally see the risk-reward not being enticing for chasing new trades in the current market. If one cannot shake off the action bug, they should at least be very selective.
If you are looking for our Systematic Signals directly, you can find them in our dedicated morning note on SPY, QQQ, BTC, TLT, AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA (free), PLTR (free).
Let’s dive in!
Table of Contents
DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
0. YXI Daily Dashboard
The Three Daily Observations
Investor risk sentiment is turning more neutral.
Energy prices spiked on Wednesday due to Middle East tensions.
Fed Liquidity is neutral week-on-week.
Click here for the past YXI article explaining many of the components of the dashboard.
1. May CPI Review
On Wednesday, both the Headline CPI and Core CPI data for May came in softer than expected - 0.1% MoM vs. the estimated 0.2% and 0.3% respectively.
May Headline and Core CPI, YOY
May CPI marked a third month in which the Headline CPI was below 2.5% and Core CPI stayed at 2.8%.
May CPI Components
A closer look at the component changes show that the slowdown in CPI was in fact broad-based:
Headline CPI was pulled down by a -1% MoM change in Energy prices
Rent of primary residence and Owner’s equivalent rent both slowed MoM.
Medical care services and transportation services both slowed MoM.
The 2-year yield fell in the wake of CPI data, as the market priced in more cuts from the Fed. The data is supportive of the narrative that inflation is normalising towards the Fed target, although there are still large uncertainties around the lasting impact of the tariffs.
2. SPY, QQQ, (SPDW)
SPDW is updated every Monday.
SPY opened in the green yesterday, only to get smacked by the bears in the afternoon. Investors are increasingly anxious by the sustainability of the current rally given all the policy and valuation concerns that have plagued the market this year.
While it’s too early to call the “top”, one should watch out for the sentiment changes astutely in the coming week. $592 is a major supporting area with heavy volume profile.
QQQ pushed higher along the trend line at Wednesday’s open, but again fell back.
Should wave (iv) have begun, we first have a supportive area at $520, where large volumes have traded. We have the next supportive area at the 200 EMA, which is just around the 0.382 retrace of wave (iii).
3. FOMC Projections & Rates Futures
FOMC Projections
We use the Fed Funds futures market to understand the market expectations of future FOMC interest rate decisions.
FOMC Date | Before Meeting | Post Meeting | Hike/ Cut in % |
|---|---|---|---|
06/11/25 | 4.33 | 4.33 | 0 |
07/30/25 | 4.33 | 4.23 | -0.1 |
09/17/25 | 4.23 | 4.13 | -0.1 |
11/05/25 | 4.13 | 3.98 | -0.15 |
12/17/25 | 3.98 | 3.83 | -0.15 |
01/28/26 | 3.83 | 3.68 | -0.15 |
03/18/26 | 3.68 | 3.58 | -0.1 |
05/06/26 | 3.58 | 3.48 | -0.1 |
06/17/26 | 3.48 | 3.38 | -0.1 |
The market added 10bp of cuts into the next 12 months, so half way between 3 versus 4 cuts before June 2026.
3-month SOFR Futures Yields
4. Summary Of Today’s YXI Signals
SPY, QQQ, BTC, TLT, AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA, PLTR
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