Several weeks ago, investors and markets breathed a sigh of relief, following the publication of US June CPI data (released in July). The data printed well below expectations at 3.0 per cent year on year (y/y) (headline) and 4.8 per cent y/y (core). Even more impressive was the large fall in contemporaneous CPI prints – both headline and core inflation printed below expectations. The core measure printed at 0.16 per cent month on month (m/m), meaning that the annualised pace of underlying inflation is now running at just below 2 per cent. Bonds rallied on this news (meaning that prices…

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