Bond Markets Shaken By A Sudden Inflation Surge

Australia and Canada surprised markers this week after inflation came in higher than
expected. Bond market expectations immediately shifted: in Australia, markets now see
one last rate rise as a possibility while Canada, which initiated the move to cut rates on
June 4, is expected to proceed more carefully. Canada’s inflation seems essentially to have been caused by rebounding rents. The other components would appear to confirm that inflation is falling back.