Recently, a strategist at State Street made an interesting point. Looking at the latest US CPI figures, it really means that deflationary trends are becoming firmly established.

Up until now, inflation has been a persistent problem, but now it finally seems to have peaked. The data clearly shows improvement, and the market also appears to be starting to recognize this.

And, this is of crucial importance, but if this trend continues, the Federal Reserve will have no choice but to act. The market has already begun to price in the almost certain possibility of interest rate cuts within the year.

Considering what it truly means for inflationary pressures to be easing, the economic scenario moving forward could change dramatically. I think it’s definitely worth paying close attention to market movements at this timing.