Inflation is Increasing Pressure on the Fed. Economic data releases were light this week given the US holiday with the most important readings coming from inflation. Both consumer (3.4%) and producer (5.4%) inflation remained well above the Fed’s target, increasing the probability of a rate hike starting as early as next week. Jobless claims were slightly above forecasts though continued stabilization in the labor market remains apparent. Consumers nonetheless remain worried –University of Michigan Consumer Sentiment remains near all time lows and wages are struggling to keep up with inflation. We expect a persistently K-shaped economy as a result, with consumers lagging investment trends.











