Will hot US inflation data unsettle markets?

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Will hot US inflation data unsettle markets?

US government bonds rallied on Friday following a weaker-than-expected reading on American job growth for the month of May. But a key report on consumer price inflation will provide a fresh test for investors.

Consumer prices rose at its fastest pace in more a decade in the 12 months to April, but analysts project that it has picked up even more since then, raising fears that the economy is overheating.

Economists surveyed by Bloomberg expect the year on year inflation rate to have jumped to 4.7 per cent in May in figures to be released by the Department of Labor on Thursday, compared with 4.2 per cent in April.

The “core” inflation rate, which excludes the more volatile prices for food and energy, is expected to have risen from 3 per cent in April to 3.4 per cent in May, economists polled by Bloomberg project. That would be the highest level since the mid-1990s.

Jay Powell, the Federal…

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