The US Monetary Policy Cycle Is Ahead of Several Other Major Markets

Headline inflation last week fell to 3.0%, as way below market expectations, PPI followed in the same direction. We're also watching things like owner's equivalent rent for the next few months as being key indicators. And we're watching to see if a tougher than expected growth outlook forces the Fed to tilt its priorities from inflation to growth. If the longer-term outlook for inflation and this trend lower continues, it'll likely steepen the yield curve,. That'll benefit assets that are sensitive to short-term rates. It'll also pull down cash yields, of course, and make a big change for investors who spent the last year adjusting their portfolios for exactly the opposite effect.