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Expanding Business Activity, Climbing Output Costs, and Growing Nerves About Tail Risk

The Chicago PMI raced past projections and surged to a fresh record in May and the ISM Manufacturing PMI continues to show rapid expansion in factory activity—though neither is without accompanying pricing pressures and climbing output costs.

Consumer spending has returned to its pre-pandemic trend, but has purchasing power shifted? And what are the markets forecasting when it comes to inflation? And though the markets saw a relatively sleepy start to June, the CBOE Skew Index—a measure of the perceived probability of outlier equity returns—shows investors growing more nervous about tail risk. Is this yet another tie to inflation anxiety as U.S. bond spreads shrink to their tightest since 2007?
 

1. The Chicago Regional Fed survey hit a record high:

6.2-The-Chicago-Regional
6.2-U.S.-manufacturing
6.2-Regardless-of-what
6.2-Yet-even-the-inflation
6.2-The-tale-of-two-cities
6.2-Natural-skepticism
6.2-One-can-argue
6.2-Printing-money-and-bonds
6.2-Gold-while-positive
6.2-The-USD-is-nearing
6.2-It-took-a-while
6.2-Europe-appears-to-be