Why won't the bond market reflect 8% inflation?
One reason is because the market thinks inflation will peak soon.
We have another important inflation data point coming Friday, but it was the May 25th news on core personal consumption expenditures (Core PCE inflation) that helped stop the market decline. Core PCE indicates a possible peak and decline in this important data series (important because the Fed watches it closely).
Inflation may fade as stimulus is withdrawn, interest rates rise, demand falls, and the economy slows down.
However, powerful behavioral inflation has been unleashed in wages, rents, housing, energy and food. War and supply disruptions aren't helping either.
Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
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