May 2026 core PCE came in at 3.4% annually, the hottest reading since October 2023 but meaningfully below the 4.1% consensus forecast. The undershoot relative to expectations provides modest relief to rate markets but the absolute level remains well above the Fed's 2% target, limiting the committee's ability to ease policy at upcoming FOMC meetings.
For Armada's traditional repo desk, a prolonged elevated SOFR environment sustains attractive overnight and term repo yields but also raises funding costs for leveraged counterparties like hedge funds and asset managers. Armada should confirm term repo books are priced to reflect the current SOFR trajectory and that counterparty credit assessments account for sustained high borrowing costs compressing hedge fund margins.