Nordea with the note. I see US inflation tumbling next year:
We see clear risks of a big positive surprise to the May inflation report as well with core inflation around or just above 4%. The market is still buying the transitory inflation narrative but for how long?
Lately, increasing (US) inflation has been the main concern of markets. A roaring economic comeback seems likely and this Friday’s coming job report is expected to confirm a declining unemployment rate and potentially a cheque-fueled increase in wage growth. Yet the inflation numbers have more to tell and we can elucidate which components are worth following closely over the coming months. We are likely in for another inflation shocker in June, but the question is whether the market will explain it away as a transitory effect.
