Employment Is Heating Up, But So Is Inflation

As we've been predicting in recent months, labor market conditions are improving, while inflationary pressures remain elevated. We expect the FOMC will shift to a tightening bias at the June meeting of the Fed's policy-setting committee and will probably hike the federal funds rate in July if current trends persist.

Don't get us wrong, we expect inflationary pressures to ease later this year, assuming, as we do, that the price of crude oil will settle between $75-$85 a barrel once the war in the Middle East has been resolved, opening the Strait of Hormuz to free maritime passage again. Oil tankers are reportedly already passing through the strait if their owners pay Iran's "toll."