As the US Treasury prepares to auction 2-year Treasury notes, concerns arise over potential yields of 5%. Market sentiment has been lukewarm towards recent auctions due to large issuance sizes. Inflationary pressures remain a concern, but experts believe it is largely US-specific rather than global, driven by fiscal deficits, high mortgages, and business excellence. Rent inflation, particularly the calculation method for owners’ equivalent rent, is a significant contributor. However, recent data suggests a flattening in rents, which could lead to divergence in the PCE inflation measure and potentially trigger a market shift towards rate cuts, weakening the US dollar and boosting risk assets.