US faced with inflationary dangers

For some time the key issue dominating global bond markets has been whether the US economy can pull off a soft landing, avoid a significant rise in inflation and prevent the need for several further rate increases. Investors have nervously been following any news which might provide some clues on the outlook. We believe the US economy is in the early stages of an economic slowdown, albeit one that is not sudden or dramatic. The magnitude of the slowdown is vitally important. Unless levels of activity fall to below the long-term potential of the economy, capacity constraints will continue ...