The Rorschach inkblot test was created in 1921 to analyze how individuals who view the exact same picture perceive and interpret external reality. While the ink pattern is factually the same, different people can and do project different interpretations of the data. Markets are experiencing a similar test right now in trying to interpret the “inkblots” from recent economic data, and particularly so around inflation and how much of the recent spike was transitory due to so called base effects. While fixed income and equity markets have remained relatively patient thus far, the next two to three months should see the peak of those inflationary base effects coming through. This period could be cause for a bit of increased market angst driven by interest rate fears in some of the more rate-sensitive sectors of markets. Indeed, May’s CPI (Consumer Price Index) print of 5% was the highest in 13 years adding fuel to the debate. However, any meaningful volatility likely would be capped by a continuation of support from the Fed and fiscal spending, which continue to underpin a strong consumer and corporate picture. This would continue to favor credit and support a yield focus for investors to counter the impacts from higher rates on Treasuries.