Good afternoon traders. We spent Monday telling you Wednesday's CPI was the number of the month. It delivered, just not in the dramatic way half the desks on Wall Street were braced for.
CPI Wednesday: A Number That Split The Difference
May CPI printed close enough to consensus that it did not give either side of the market a clean win. Headline inflation stayed elevated, shelter and energy components remained the persistent drivers they have been all year, and core inflation showed no real evidence of cooling toward target. It was not the hot surprise that would have forced an immediate repricing of rate hike odds. It was also nowhere close to the soft print that bulls in gold and bonds were hoping for.
The market's reaction told the real story. A muted, almost anticlimactic session. Traders are increasingly treating individual data points as noise around a trend that has already been set. That trend is inflation running hotter than the Fed projected back in the spring, and a Federal Reserve under Kevin Warsh that has stopped pretending otherwise.
With CPI now out of the way, all eyes have shifted to next week's FOMC meeting. The market is pricing a hold as close to certain as these things get, but the real action will be in the dot plot and in how Warsh frames the inflation problem in his press conference. We will be on the Telegram through that decision in real time.
Gold Holding The 4,300 Line
Gold spent the week defending the 4,300 level we flagged on Monday. It is not exploding higher, and given the CPI print did not hand the market a clean disinflation story, that is not surprising. But it is also not breaking down. The structural bid, central bank accumulation, an unresolved Iran situation, a Fed that has not actually delivered the hawkish shock yet, is still intact underneath the chop.
Watch this level closely into the FOMC. A genuinely hawkish dot plot next week is the scenario that finally tests 4,300 with conviction. Until then, this is a market in a holding pattern, waiting for the next real catalyst rather than reacting to noise.
EUR/USD and the Dollar
Euro spent the week consolidating in the 1.1585 to 1.1685 range, unable to build real momentum in either direction with CPI delivering a split decision rather than a clear signal. That range has now held for the better part of three weeks and it is the level structure to know walking into the FOMC.
The Dollar remains firm but not aggressively bid. It is behaving like a market that knows the bigger decision is still a week away and is unwilling to commit real size ahead of it. GBP/USD continues to trade heavy in the 1.33 handle, still digesting the UK labour data from earlier in the week.
The Bottom Line Heading Into The Weekend
This was a week that delivered its headline number without delivering real resolution. CPI came and went without changing the conversation. The conversation that actually matters, what the Fed signals about the rest of 2026, is still a week out.
Do not mistake this calm for safety. Markets that go quiet ahead of a major central bank decision have a habit of making up for it fast once the decision lands. Position with that in mind.
Here at Cayman we will have the FOMC breakdown live on the Telegram the moment the decision and the dot plot drop next week.
Levels, bias, and session notes all week on the Telegram. See you Monday.