The US unemployment rate dropped to 4.3% in May, a level not seen since the height of the dot-com bubble almost twenty years ago. Conventional economic thought, characterized by the “Philips Curve”, posits a fundamental trade-off between unemployment and inflation. Low unemployment should put upward pressure on wages and production costs leading to higher inflation. It is tempting to say “this time is different” and the market seems to be drifting into this mode. As shown below, CPI inflation has trended higher since 2015 and began 2017 at a 5-year high. Inflation has since moderated – largely reflecting softer oil