ES Rallies Into Close After Choppy Trade, All Eyes on CPI

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Our View

After another crappy close, the ES traded down to 5991.25 and rallied up to 6040.75—a 49.5-point rally on Globex. It was trading above 6020.00 before 9:00 a.m., then pulled back to the 6016.00 level and opened Tuesday’s regular session at 6016.25. I thought with a larger overnight range, we could see some increased trade during the day session.

By 11:30, the "larger range" had not materialized. The morning range was a mere 15 points. Around 11:35, the ES started to pull back and traded down to the 6015 level, then popped back up to the highs at 6040.00, before selling off again to the 6015 level. My guess was it was going to be another round trip back up to the highs. And it was—the ES traded all the way up to 6049.50!

After a 13-point pullback, it rallied a bit when the MIM came out showing $744 million to buy.

The trade has shifted from some of the largest dips and rips we’ve seen since the Covid-19 pandemic to 20–30-point ranges, sometimes just over 20-point ranges for hours. I think when you take into account all the economic woes and the fact that we’ve seen a 21% rally, the public has gone on vacation. The traders weathering the storm right now have lowered their sights and adjusted to the slower pace and smaller ranges.

From what we’re hearing, the US-China talks have moved into the second day—and into the night—with a possible third day of negotiations as both countries work toward a trade deal. I think we all know that no matter how the deal ends, Trump will take credit for it and call it a beautiful deal, even if it’s not what he initially wanted. At the same time, the World Bank is the latest institution to warn that Trump's trade policies could weigh on US growth.

At the end of the day, the futures index markets closed higher: the NQ up 0.5%, the ES up 0.4%, and the YM up 0.20% on the day.

CPI Day Estimates

• Goldman Sachs estimates a 2.5% year-over-year CPI. This reflects a slight uptick in inflation, noting a small tariff-related impact for May, with larger effects expected in subsequent months.

• J.P. Morgan estimates for the May CPI is 2.4%.

• Morgan Stanley projects 2.5% year-over-year for headline CPI and 2.9% for core CPI. This reflects a modest rise, with restrained headline inflation but sticky core inflation, influencing Fed policy expectations.

• Citibank estimates 2.5% year-over-year, based on consensus forecasts from FactSet. This is consistent with broader economic trends and forecasts from other major banks.

What’s the takeaway? They already know what the number will be...