Welcome to our chart-pack on US inflation ahead of the all-important release of the June CPI report on Wednesday. It is last chance saloon for the disinflationistas as the base effects will turn harder to beat in the coming months but we see a good chance of an inflation surprise below the 3% handle in headline terms, which should provide us with a decent exit liquidity in long duration proxies in both bonds and equities in case.

We see headline inflation at around 2.95% making it a tough call between 2.9% or 3.0% as the screen print, while we see core inflation at 4.87% – both are clearly below consensus.

Let’s have a look at the details

Chart 1: A decomposition of the US CPI from May