No sign of easing inflationary pressure
After another inflation surprise in the U.S. on Friday, when the core inflation index for May rose 0.6% month-over-month for the second month in a row, bond yields and the U.S. dollar continued to rise and equity prices fell in overnight trading. Inflation concerns were heightened on Friday by a sharp rise in U.S. household inflation expectations for the next 5-10 years from 3.0% to 3.3%. This is the highest level in 14 years and clearly indicates a risk that inflation expectations are losing ground. We see no signs of easing inflationary pressures in the U.S. and the euro area.