• The latest CPI data for May was lower than the April number and was also below market expectations.
  • A sustainable decline in inflation is likely to encourage the Fed to cut policy rates, although the bank would remain vigilant.
  • Fixed income assets may benefit from this progressively slowing inflation.

Actionable Ideas

  • US bonds
    In an environment of risks around economic growth, and falling inflation, US government bonds may offer good value. We also believe, high quality corporate credit is attractive.
     
  • Global bonds
    Expectations of interest rate cuts in countries such as the UK, and robust economic growth in emerging markets, call for a global approach to bonds. This could be complemented by quality credit.

Key Dates

18 June

Euro Area CPI, US retail sales

 

19 June

UK CPI, South Africa CPI

 

20 June

China 5 year loan prime rate

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