Leading indicators do not support expectations of a Fed hike this year. The US policy leading indicator has rolled over since the beginning of the year, when it was pointing to significant easing. Even so, it remains far from the sub-35 threshold associated with Fed hikes. Real yields have also caught up with that earlier move. Inflation signals are beginning to turn as well. Our diffusion index for global inflation-leading inputs is now rolling over, an early indication that the global inflation impulse may have peaked. While there is still room for upside surprises, this signals a trend towards downside surprises is more likely in 2h26 The timing further weakens the case. A single 25bp hike only months before the midterms would offer the Fed limited policy benefit relative to its potential costs. Growth leading indicators continue to improve, while inflation risks are beginning to ease. That combination keeps the cyclical backdrop risk-on and leaves little support for a Fed hike.(Delphi Digital)