US inflation

US CPI remains very elevated. Headline inflation is set only to worsen, as recent energy prices feed through.


The data is elevated no matter what frame you use…


…and the month on month data does not show any deceleration, just yet. In other words, no reason to assume that inflation is about to slow, over the next few months, and if anything, reason to expect acceleration.


It appears expectations remains well anchored, however, and as such bond yields, although moving modestly higher, do not look poised to double, as per the below regression line(s). The bond market continues to look through current inflation, on the belief that expected inflation will continue to be much lower (2-3%).


In our view, reals (TIPS) do remain too low, given the output gap, and another 1% to TIPS would be very harmful to pockets of the market that are trying to fire (the secular growth narrative stocks/long duration stocks).


Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Receive our investment insights

Something went wrong. Please check your entries and try again.