We’d like to thank our summer analyst interns, Max Persico, John Schreiber and John Hufnagel for all their help this summer and putting this important research piece together for us and our clients. Inflation concerns continue be at the forefront of investors’ minds, and rightfully so. The CPI and PCE data over the past few months suggest inflation is a legitimate threat to the strong economic recovery. While Fed Chair Powell has stated that recent inflation strength is reflective of temporary pressure from supply chain constraints, he has also stated, “As the reopening continues, bottlenecks, hiring difficulties, and other constraints could continue to limit how quickly supply can adjust, raising the possibility that inflation could turn out to be higher and more persistent than we expect.” At TPCM, we continue to believe the inflation scare will be transitory, and the bond market rally over the past few months appears to agree with us. We have examined the July CPI and PCE reports to identify key drivers of recent inflation prints and then delved into recent company commentary for further clues as to when we can expect supply shortages to sort themselves out.