Stubborn US inflation highlights the risks to our forecasts

The strength of price pressures evident in May’s US CPI report seems to have raised the risk of the Fed hiking rates by even more than we had thought in order to bring inflation under control, and therefore of a sharper economic slowdown. We now think that the risks to our 10-year Treasury yield forecasts are to the upside and those for the S&P 500 to the downside.

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