Wall Street worries about inflation again

While the U.S. CPI rose by the most since 2008 in May, data released on Thursday gave the Federal Reserve a firm grip that the spike in inflation will be only short-lived. But Wall Street remains worry on inflation. Continuing to buy inflation-protected bond ETFs, the $29 billion iShares TIPS ETF (TIP) has seen six straight weeks of inflows despite price volatility.

On the stock market, technology stocks led the gains, with the Nasdaq 100 outperforming the broader market, and more economically sensitive sectors lagging behind. Flow into ETFs tracking small-cap and value stocks slowed after peaking in March. The $45 billion Financial Select Sector SPDR Fund (XLF) saw its biggest divestment since April on Wednesday; the $70 billion iShares Russell 2000 ETF (IWM) saw its overall decline in June despite three straight days of strong inflows. 

The recent slowdown in market inflation expectations is seen as a boost to growth, strategists said. The odds of an improving labor market pushing yields rise again as short positions in the bond market are wiped out, but the Wall Street. Still concerns about the resurgence of inflation