Daily Market Outlook, June 10, 2026
Daily Market Outlook, June 10, 2026
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute – CPI Looms as AI Loses Altitude
Global equities remain under pressure as technology stocks continue to unwind and investors turn more defensive ahead of today’s US inflation report. The MSCI Asia Pacific index fell 2.5%, its fourth decline in five sessions, while Korea’s KOSPI dropped 6.3% as semiconductor shares gave back more of their AI-driven gains. Nasdaq 100 futures are down around 0.8%, and European markets are set for a weaker open. The key shift is that AI is no longer insulating equities from the macro backdrop. Earlier in the year, investors were willing to buy every dip in the chip complex, treating AI capex as a structural force strong enough to offset geopolitics, higher yields and valuation concerns. That confidence has weakened. The fall in Korea, one of the clearest global expressions of the AI trade, suggests investors are reassessing how much future growth is already embedded in prices. Oil is not offering the same kind of shock impulse it did earlier in the conflict. Brent is now below $92/bbl, lower than Friday’s close, despite more military action after the US delivered what it described as a proportional response to Iran shooting down a US helicopter patrolling the Strait of Hormuz. That suggests markets still see the conflict as contained, or at least not yet severe enough to disrupt flows materially. However, the geopolitical risk has not disappeared; it is just being outweighed for now by broader risk-off positioning and concerns over demand, policy and positioning.
Inflation is the central focus today. The US May CPI report is expected to show headline inflation at 0.5% m/m and 4.2% y/y, in line with the Cleveland Fed nowcast. The same nowcast currently points to some easing next month, with headline CPI settling nearer 4.05% y/y and core holding around 2.8% y/y. That means today’s print matters because an upside surprise would undermine the tentative expectation that price pressures are close to peaking again.
The market reaction function is asymmetric. A soft CPI print could help stabilise risk assets after the recent tech-led sell-off and support duration. But a strong number would reinforce the post-payrolls repricing toward a more hawkish Fed, especially with labour-market data having surprised firmly to the upside. Treasury yields have already moved higher, with the US 10-year around 4.54%, and the Dollar is benefiting from the rise in yields. If CPI beats, the market may start to treat further Fed tightening not as a tail risk but as the base case. Gold is a key cross-asset signal. It has fallen below $4,200/oz after breaking its 200-day moving average following the employment report. That technical break matters because gold had been supported by geopolitics and concerns over fiscal credibility, but higher real yields and the prospect of a hawkish Fed pivot are now weighing more heavily. A strong CPI print could accelerate downside momentum, as bonds become relatively more attractive and the opportunity cost of holding gold rises.
China’s inflation data add another useful piece to the global inflation puzzle. CPI held at 1.2% y/y in May, slightly below expectations, while PPI rose sharply to 3.9% y/y. Food prices were down 1.7% y/y, and the widening gap between producer and consumer prices suggests the energy shock is lifting input costs but not passing fully through to consumers. That is a classic sign of weak pricing power. It also implies margin pressure for firms, unless external demand or policy support absorbs the squeeze. Japan remains a rates-market pressure point. JGB futures continued to fall after a weak 30-year auction, showing that long-end supply and policy normalisation concerns are still weighing on the market. With the BoJ expected to hike and gradually adjust bond purchases, investors are demanding more term premium. That is relevant beyond Japan because higher Japanese yields can influence global duration demand, especially if domestic investors become less willing to hold foreign bonds unhedged.
In the UK, the gilt story remains more idiosyncratic. The divergence between US and UK short-rate expectations has become clearer since Friday’s strong US jobs report, yet 10-year gilt yields still look high relative to Treasuries for the observed level of 1y1y OIS spreads. The natural explanation is a political and fiscal risk premium rather than a pure monetary-policy story. The same conclusion appears when comparing gilts with Bunds. A model of the expected gilt-Bund spread based on fundamentals such as supply, inflation and policy expectations leaves a residual gap that opens around the recent rise in UK political uncertainty. Adding a political-risk variable — for example, the Polymarket-implied probability of Starmer departing as PM by year-end — helps explain the divergence. That suggests markets are pricing the possibility of a different, potentially less market-friendly fiscal strategy. That risk is unlikely to vanish quickly. Next week’s Makerfield byelection may sharpen the political narrative, but it is unlikely to resolve uncertainty around leadership, fiscal rules or the direction of policy. As a result, long-end gilts may continue to trade with a persistent risk premium even if the BoE remains more dovish than the Fed or ECB on near-term policy.
Markets are entering US CPI day with risk appetite already fragile. AI momentum is fading, gold has broken technical support, Treasury yields are rising and the Dollar is firm. Oil is below Friday’s close despite further strikes, suggesting geopolitics is not currently the dominant inflation impulse. Today’s CPI will decide whether the market can stabilise around a peaking-inflation story or whether the post-payrolls hawkish Fed repricing has further to run.
Overnight Headlines
US Launches New Strikes Against Iran After Helicopter Shot Down
Iran Says It Targeted US Fifth Fleet In Bahrain After American Strikes
Bond Trader Positioning Signals Fed Rate Hikes Are Coming Fast
US CPI Forecast To Hit Three-Year High As Oil Shock Persists
BoC Set To Stand Pat As Recession Signals Clash With Inflation Risks
ECB Set To Hike Rates Amid Rising Inflation, Growth Concerns
BoJ Watchers See Two Rate Hikes In 2026, Starting With Next Week
Japan PPI Jumps Again On Elevated Energy Costs
China CPI Inflation Misses Expectations In May
SoftBank’s Attempt To Get $6B OpenAI Margin Loan Stalls
OpenAI In Talks To Lease 10GW Ohio Data Centre Backed By Nvidia
Anthropic Opens Mythos AI Model To Public With Safeguards
Super Micro Plans To Raise $7B In Equity For AI Equipment
SpaceX Aims To Launch Orbital AI Computing Tests By End-2027
Google Backstops Underpin $35B AI Chip Deal For Anthropic
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)
EUR/USD: 1.1965 (EU1.15b), 1.1430 (EU930m), 1.1700 (EU920.7m)
USD/JPY: 160.00 ($1.64b), 160.50 ($1.09b), 160.25 ($619.2m)
USD/BRL: 5.2500 ($751.2m), 5.0000 ($723.1m), 5.1250 ($461.7m)
EUR/GBP: 0.8735 (EU398.4m)
USD/CNY: 6.8500 ($318.1m)
GBP/USD: 1.3350 (GBP391.2m)
USD/CAD: 1.3950 ($421.5m), 1.3435 ($353m)
NZD/USD: 0.5500 (NZD685m), 0.5800 (NZD475.9m), 0.5775 (NZD460m)
USD/KRW: 1535.00 ($593.7m)
CFTC Positions as of June 5, 2026:
In a notable shift in market dynamics, equity fund speculators have ramped up their net short position on the S&P 500 CME, adding a hefty 38,113 contracts to bring their total to 485,582. Meanwhile, equity fund managers have trimmed their net long position by 23,807 contracts, now sitting at 985,207.
Turning to the Treasury futures market, speculators have also increased their net short positions across various maturities. The CBOT US 5-year Treasury futures saw an increase of 46,091 contracts, pushing their total to 1,369,218. The 10-year Treasury futures experienced a rise of 41,621 contracts, reaching 829,575. Not to be left out, the net short position for the CBOT US 2-year Treasury futures surged by 94,942 contracts, totaling 1,350,188. Additionally, the net short position for the CBOT US UltraBond Treasury futures grew by 27,868 contracts to 287,710. In contrast, speculators have slightly reduced their net short position in CBOT US Treasury bonds by 39,398 contracts, now standing at 159,853.
On the cryptocurrency front, Bitcoin maintains a net long position of 2,458 contracts.
In the currency market, the Swiss franc is showing a net short position of -32,909 contracts, while the British pound has dipped to a net short of -52,218 contracts. Conversely, the euro is in a more favorable position with a net long status of 48,866 contracts. The Japanese yen continues to struggle with a significant net short position of -129,567 contracts.
Technical & Trade Views
SP500
Daily VWAP Bearish
Weekly VWAP Bearish
Above 7550 Target 7700
Below 7480 Target 7200
DXY
Daily VWAP Bullish
Weekly VWAP Bullish
Above 99.20 Target 100.30
Below 98.80 Target 98.40
EURUSD
Daily VWAP Bearish
Weekly VWAP Bearish
Above 1.1710 Target 1.18
Below 1.1580 Target 1.1450
GBPUSD
Daily VWAP Bullish
Weekly VWAP Bearish
Above 1.3465 Target 1.3525
Below 1.3425 Target 1.3150
USDJPY
Daily VWAP Bullish
Weekly VWAP Bullish
Above 159.30 Target 162.20
Below 159Target 157.95
XAUUSD
Daily VWAP Bearish
Weekly VWAP Bearish
Above 4550 Target 4700
Below 4500 Target 4100
BTCUSD
Daily VWAP Bearish
Weekly VWAP Bearish
Above 66.5k Target 72k
Below 66k Target 52.2k
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!