Inflation Heat Could Put Markets at a Turning Point

Inflation is reaccelerating, led by oil, with April CPI expected at 0.6% month-over-month and 3.7% year-over-year. Markets price in no Fed rate cuts and potential ECB tightening; despite higher inflation, bond markets show a dovish Fed bias as real yields fall and inflation swaps rise, making the CPI release a key catalyst that could trigger a major shift in Treasury yields and the dollar.