Markets initially moved higher at the beginning of the session, with small caps and semiconductor stocks outperforming, but began to fade after Commerce Secretary Lutnick acknowledged the tariff rate for China (55%) won’t be changing (more below).

After the CPI report, Trump reiterated his recommendation to lower interest rates. The question remains; will the Fed listen?

One key number today was Supercore inflation at 0.06% M/M for May from 0.209% in April, with Powell having said he’s keeping an eye on this metric. This number, during the surge of 2022 inflation, ranged from 0.31% to 0.96%.

Another notable move, post CPI, came from the 10-year treasury yield (TNX).

Secretary Lutnick said that China tariffs will not change from here and expects further deals with other countries in the coming week. Furthermore, he noted that the USA will not provide its best chips to China. Secretary Bessent added that China should not be allowed to export its way back to prosperity and that the tax cuts will provide non-inflationary growth.

Six sectors are moving higher, albeit mostly marginal increases, with the leader being Health Care (XLV). Meanwhile, Materials (XLB) is the worst performer as steel stocks slide on tariff reduction concerns.

Most Magnificent Seven stocks are moving lower, except for Microsoft (MSFT) and Tesla (TSLA).

It was a decent 10-year auction showing strong demand. The 10-year bond sold by the US Treasury was worth $39.7 billion, had a Bid-to-Cover of 2.52 and a High Yield of 4.421%.