The S&P 500 is in the red with nine of eleven sectors declining. Interest-rate sensitive sectors, Real Estate and Utilities, are the worst performer.

Treasury yields surged to two-week highs after this morning’s data showed weak consumer spending and hot inflation.

Hot producer prices and weak retail sales don’t look great. This morning, we saw headline and core PPI at 1.6% and 2.0% y/y, both above consensus of 1.2% and 1.9% y/y. The Fed’s plans to reduce interest rates are going to be very difficult to justify given the latest trend on inflation.

Now, the probability of a June rate cut has moved below 60% from 74% a week ago.