May 12 was the day two of the biggest macro events of the month arrived simultaneously: the April CPI print and the Senate vote confirming Kevin Warsh to the Fed's Board of Governors, clearing the path for his Chair confirmation the following day. Both landed with more force than markets had fully priced.
What did April CPI show?
The Consumer Price Index rose 0.6% month-over-month in April, released May 12, putting the 12-month rate at 3.8%, above the Dow Jones consensus of 3.7% and the highest annual rate since May 2023. Core CPI, excluding food and energy, rose 0.4% month-over-month and 2.8% year-over-year. The monthly core reading was the highest since January 2025. Energy drove the headline: prices jumped 3.8% on the month and 17.9% year-over-year. Gasoline alone was up 28.4% annually.
The inflation picture is being shaped by the Middle East conflict and its impact on global energy supply. The Fed's preferred measure is PCE rather than CPI, but a 3.8% headline CPI leaves no room for dovish pivoting regardless of who chairs the central bank.
What happened with the Kevin Warsh confirmation?
The Senate confirmed Kevin Warsh to the Federal Reserve Board of Governors in a 51-45 vote on May 12, with Pennsylvania Democrat John Fetterman the only member to cross party lines. Warsh was then confirmed as Fed Chair in a 54-45 vote on May 13, the most divisive vote for a Fed chair in the modern era. He takes over from Jerome Powell, whose chair term ends May 15, though Powell remains on the Board of Governors.
Warsh has publicly argued the benchmark rate can be lower and has called for "regime change" at the Fed. CME FedWatch data showed approximately 97.2% probability of a hold at 3.50-3.75% at the June 16-17 meeting. The market is not pricing Warsh's appointment as an imminent catalyst for cuts. The data has to cooperate first.
What did the week's earnings show?
Cisco (CSCO) reported Q3 FY2026 results with EPS above expectations. Applied Materials (AMAT) and Alibaba (BABA) were also in focus, with semiconductor equipment demand and China e-commerce growth as the primary variables. AI chip momentum remained the dominant sector theme across options flow: NVDA, AMD, INTC, and QCOM saw sustained call activity, though large put sweeps on semiconductor names suggested concurrent institutional hedging alongside the bullish positioning.
What is the crypto and ETF picture?
Bitcoin ETFs saw approximately $151 million in net outflows, the early stages of what would become the record 10-session streak starting around May 15. Ethereum ETFs were flat on the day. The Crypto Fear and Greed Index sat at 49 (Neutral), still in a transitional state before the shift to extreme fear that characterised the final two weeks of May. BTC liquidation activity was low-severity, with short liquidations dominating.
What does the Fed path look like from here?
The FOMC meets June 16-17, Warsh's first meeting as chair. It includes a dot plot and Summary of Economic Projections. With April CPI well above target and core CPI at the monthly high since January 2025, the data argues strongly for a hold. The question the June 17 dot plot will answer: does Warsh's first SEP signal any near-term rate cuts, or does the inflation data force him to maintain the restrictive stance he inherited?
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