U.S. Capital Markets Glide Path to Clearer Skies

Inflation must cool to allow the Fed to pause & pivot Headline CPI, Y/Y change

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%

• The Fed is gradually making progress on its effort to bring down inflation. • Headline inflation has receded from its June 2022 peak of 8.9% y/y. however, still obscure a big part of the story. • Now that supply chain and energy-related • Recent headlines,

8.9%

6.4%

4.0%

inflationary pressures have eased, stickier elements of inflation are left to contend with.

Jul-21

Jul-22

Apr-21

Oct-21

Apr-22

Oct-22

Apr-23

Jan-21

Jun-21

Jan-22

Jun-22

Jan-23

Mar-21

Mar-22

Mar-23

Feb-21

Feb-22

Feb-23

Nov-21

Dec-21

Nov-22

Dec-22

Aug-21

Sep-21

Aug-22

Sep-22

May-21

May-22

May-23

Headline CPI Inflation, Y/Y

Estimated Fed Target

8

Source: U.S. Bureau of Labor Statistics