US inflation

The 4 zeroes had it (a grand total of 4 forecasters in the Bloomberg consensus list had 0% for the m/m US inflation print).

No acceleration month on month for the headline, core likewise moderating, both comfortably below expectations. In this instance, that’s dovish to the downside.

This is good news, and the market likes it.

The problem – this is the easy bit. Commodities have declined for a few months, supply chains have eased somewhat, and rates have worked their magic.

But to get core inflation down to target (i.e. 2%) will require persistently higher rates. Thus, we think the uncertain path towards a soft landing remains just that, uncertain and difficult.

We will likely fade this rally into strength from a DAA perspective.

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