DTYS - Will Inflation Come Back To Bite The Fed?

With the Fed pivot last week and the inversion of the yield curve, sentiment has swiftly surrendered to the bearish side. Indeed, it's entirely possible that the Fed even takes preemptive action and eases further, e.g. with rate cuts. But here's at least a hypothetical question, what if inflation comes back faster than we expect?

The chart of today's post comes from some work I did last week in a special report, where I looked at some scenarios for the Fed and what we might expect next.

The chart shows US headline CPI inflation

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