It's month end so signals can be skewed but keep a close eye on bonds.
The PCE report could have kicked off a 'peak inflation' trade but it hasn't. Instead, the market is more focused on the Q1 employment cost index, which rose to the highest since 1990.
With that, US 2-year yields have extended to a a session high of 2.75%, up 11 bps on the day. If that holds, it would be a new cycle closing high and not far from the intraday high of 2.789% set last week. That bond yields can remain so high despite the turmoil in equities is concerning for risk assets.
That should also underpin the dollar bid, though we're not seeing it at the moment. That could also be a function of year end or the huge jump the dollar has already taken place.
The next catalyst for the markets will be the stock market open. S&P 500 futures are down 43 points.
