The inflation data due out this week will be high but no one seems to care.

The limited data released last week did nothing to resolve the caution investors are taking about the future course of economic recovery. The JOLTS data still reflects a record level of unfilled job openings. This condition limits the ability to increase output to meet current demand and rebuild inventories. The surge in consumer credit in May was driven by auto loans and student loans. Credit card balances also expanded by almost $10 billion for the month as a reopening economy allowed a return to a more normal service sector growth. This data would indicate continued strong growth through year-end. Yet, the narrative driving equity and bond prices is just the opposite. The markets are acting as if the strength of the rebound is slowing. The yield on the ten-year treasury dropped to as low as 1.25% last week. That is down from a post pandemic high of 1.75% only three months ago.