Bond Outlook [by bridport & cie, August 16th 2006]
The US PPI data showing only a modest increase in producer prices (0.1% July) took almost everyone, including us, by surprise. Can inflation really have been brought under control? Is this the end of Fed hikes? A fortnight ago we argued that powerful inflationary forces, mostly “cost-push”, remained. We therefore incline to a double “no” as answers to these key questions, while recognising that financial markets, for the moment at least, are leaning more towards a double “yes”. |
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