The impact of prospective higher US inflation rippled through markets yesterday as the US dollar surged higher in the afternoon. The higher than expected US Producer Prices Index (PPI) comes ahead of today’s consumer prices data, the CPI, which is expected to tick towards 2.9% but given the surprise in producers data, could have a 3 handle for the first time since 2011. This has fuelled expectation that the Fed will indeed need to push ahead with two further rate hikes this year. It is interesting to see though that this dollar strength comes with the bond markets remaining subdued and are not driving the move in the ... (full story)