Inflation

Core inflation will get close to the Fed’s 2% target by the end of this year.

The ECB is about to make its first policy mistake in the current cycle by being complacent about the downside risks to inflation. The confluence of base effects, a stronger euro, food and energy deflation, and rapid services disinflation will push headline inflation closer to 1% in the first half of the year. This significant undershoot will force the ECB to deliver reflationary cuts. Go long the September 2026 3-month Euribor futures and tactically reduce exposure to inflation-linked bonds in the Eurozone.

In our 2026 inflation outlook, we explain why 2026 will bring more disinflation, upside risks remain contained, and how to position in ILBs across major markets.

This morning’s CPI report signals that the worst of the tariff impact on inflation may already be in the rearview mirror.

Understanding asset performance across Growth and Inflation regimes helps investors construct and manage balanced portfolios. Our first G&I Catalog report examines Hedge Fund strategies. Global Macro and Managed Futures offer the strongest protection in Stagflation-like periods, when traditional assets typically struggle. Since 1998, these regimes have occurred less than 10% of the time—but that may not hold true going forward.

US inflation data continue to show no signs of price pressures beyond a near-term tariff effect.

The Fed’s actions tell us that it has chosen to avoid a recession at the cost of moving its inflation goalposts to 3 percent. Thus begins the slippery slope to price instability. Long-term investors should underweight the dollar, own some gold, but better than gold is bitcoin. Plus, a new tactical trade is short GOOGL vs. SPY.

Median Fed unemployment rate projections are overly optimistic. The Fed will end up cutting more in 2026 than it currently anticipates.

High US inflation is being driven by tariffs, not domestic inflationary pressure. This argues for Fed easing and a bull-steepening of the Treasury curve.

The European Central Bank has achieved a soft landing. Inflation is back to target, with well-anchored inflation expectations. The unemployment rate is historically low, and real economic growth is stable, albeit weak. Given that little to no additional easing will come from the ECB, investors should underweight government bonds relative to equities.