What do you do when you have heavy macro influences that are unlikely to have a near-term resolution? Inflation is going to rise due to the base effect from a year ago coupled with the economic recovery, but the Fed is holding firm on their historically accommodative stance in the belief it is “transitory.” We will only know whether it is in hindsight, which means the tug-of-war between the rise in long-term inflation expectations vs. a declining Real Fed Funds Rate is going to continue for the next few months.

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