This week the first official signs that inflation may be peaking sparked euphoria in markets. The latest CPI report from the US came in below analyst forecasts, a welcome relief from months of prices rising faster than expected. US stocks had one of their best days on record making nearly 6%. Other equity and bond markets around the world also rallied. Markets are now betting that the Federal Reserve won’t need to tighten interest rates as much and thus the chances of avoiding a recession are improved.
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