Commenting on today's US CPI data, David Rees, Head of Global Economics at Schroders said:

“Today’s inflation data have done nothing to change our view that the Fed is behind the curve. While headline inflation is being pushed around by rising energy prices, the bigger picture is that the economy is running hot and domestically generated inflation is grinding higher.

"Until the Fed starts raising interest rates, markets will continue to question its credibility - and the Treasury’s willingness or ability to cap yields. The Fed can either choose a rate hike Next week and a controlled rise in short term US borrowing costs, or do nothing and risk an uncontrolled rise in long-term US borrowing costs."