Let's briefly review the market from last night to now.

1. The May PCE rebounded above 4%, but the monthly data did not significantly exceed expectations, giving bonds a temporary sigh of relief. The 10-year U.S. Treasury yield fell back to around 4.38%, the dollar index edged lower, and the VIX remained below 20, indicating no panic selling yet.
2. Micron surged after its earnings report, with AI memory demand still being the strongest trading theme across the market.
3. However, Apple sharply raised prices on a range of products by about 20% due to surging memory and storage chip costs. The shortage of AI chips is shifting from expanding upstream profits to putting pressure on downstream hardware manufacturers' profit margins and sales volumes.
4. Apple raised product prices, but its stock plummeted 6.1%. As a result, the positive AI storage news not only failed to spread to the broader tech sector, but the Mag 7 continued to drag down the index. The divergence is that Micron and similar upstream supply-constrained companies are being bought, while Apple and other cost-burdened terminal giants are being sold.
5. The final Q1 U.S. GDP was revised up to 2.1%, but consumer spending was sharply revised down. On the surface, growth appears stronger, but internal demand is uneven. The market's interpretation leans toward stagflation—meaning the economy isn't weak enough to support rate cuts, yet consumption is already showing strain.
6. Initial jobless claims fell to 215k, below the expected 225k. Continuing claims rose to 215k. Layoffs are not high, but the pace of re-employment may be slowing.
7. New York Fed President Williams continued to emphasize that inflation is still too high. He expects inflation to remain around 3.5% by year-end, and the timeline to return to 2% could be delayed until 2028.
8. After the U.S. stock market close through the Asian trading session, risk appetite continued to weaken. South Korea, Japan, Hong Kong, and A-shares all had a rough day today, with South Korea's KOSPI experiencing another limit-down day.
9. Apple's Asian suppliers fell in tandem with Apple's U.S. stock decline, as the market worries that high storage costs will compress profit margins for terminal manufacturers of phones, PCs, and tablets, and trigger another round of price hikes.
10. "Chipflation," or chip inflation, is starting to spread.
$DRAM