Macro Briefing: 10 June 2025

Americans reduced expectations for year-ahead inflation, according to survey data for May. One-year-ahead inflation expectations fell 0.4 percentage point to 3.2%, the New York Fed reported. For the 3-year horizon, the outlook fell to 3% and the 5-year forecast ticked down to 2.6%. The declines still leave inflation expectations above the Federal Reserve’s 2% target.

The NFIB Small Business Optimism Index increased in May, rising slightly above the 51-year average. “Although optimism recovered slightly in May, uncertainty is still high among small business owners,” said NFIB Chief Economist Bill Dunkelberg. “While the economy will continue to stumble along until the major sources of uncertainty are resolved, owners reported more positive expectations on business conditions and sales growth.”

US-China trade talks in London continue for a second day. President Trump on Monday said of the negotiations of the negotiations: “We are doing well with China. China’s not easy.”

Meta is creating a new ‘superintelligence’ AI lab, according to The New York Times. The company has hired Alexandr Wang, founder and chief executive of the AI start-up Scale AI, to join the new lab.

The bond market is warily eyeing the mega spending bill moving through the Senate. “The best outcome for the bond market is they can’t agree,” said Brij Khurana, a fixed-income portfolio manager at Wellington Management. Gridlock between fiscal hawks and Senators willing to pass the bill might force negotiations to lower spending, which would likely be greeted positively by the bond market.