Anticipating Higher Inflation, How Much Priced in Ahead Fri CPI?

Broader markets caught up to ECB hawkish hold early Thursday, rates extending lows on ECB guidance of additional rate hikes in Sep and on w/potential for 50bp move anticipated.

• After some early volatility, yield curves extended flatter, 2s10s -2.338 at 22.212 vs. 25.237 early high. Large front end sales/crosses contributed to curve bear flattening after -12,434 TUU2 104-30.62 (-4.88), sell through 104-31.12 post-time bid at 1102:04ET.
• Tys pared losses, bonds back steady immediately after $19B 30Y auction re-open (912810TG3) stops through: 3.185% high yield vs. 3.200% WI; 2.35x bid-to-cover vs. 2.38x last month.
• stocks extending lows in late NY trade (ESM2 -40.0 at 4076.0) as markets contemplated already high CPI estimated read for May CPI (+0.7% vs. 0.3% prior) in the aftermath of the ECB's hawkish hold policy annc this morning.
• Support for stocks evaporated after the ECB said it would aim to raise its key interest rate for the first time since 2011 by 25 basis points in July, and said it could increase rates by a greater increment in September unless the inflation outlook moderates.