What is the current outlook for US inflation according to the ICIS Economic Summary, and how does it compare to the Federal Reserve's target?

According to the ICIS Economic Summary, US inflation is expected to average 3.4% in 2026, up from 2025 but down from 4.1% in 2023 and 8.0% in 2022; it remains above the Federal Reserve’s 2% target. The May CPI report showed a 4.2% year-on-year increase, with core CPI (excluding food and energy) at 2.9%, reflecting the impact of the Middle East conflict on energy costs. Inflation is projected to ease further to 2.3% by 2027, though elevated fiscal deficits and persistent inflation have kept key interest rates—such as the 10-year Treasury yield—at levels higher than those seen in the 2010s.

How are US manufacturing and services sectors performing, and what do the latest PMI readings indicate?

The US manufacturing sector extended its expansion with the May ISM Manufacturing PMI at 54.0—the fifth consecutive positive reading—with solid gains in production, new orders, and order backlogs across 16 of 18 industries. Simultaneously, the ISM US Services PMI rose to 54.5 in May, marking the 23rd consecutive month in expansionary territory, with strong business activity and new orders—potentially driven by pre-buying and supply chain resiliency efforts.

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