Whether the fiscal impulse from the OBBB (not to mention tariffs) will cause another inflation wave is an important question, not only for the Fed as it contemplates the timing of its next rate cut, but for fixed income and equity valuations as well. Below we see that the TIPS 5y5y forward break-even has been stuck in a tight range of 2.0-2.5% since the COVID spike in 2020. Nothing to see here. Well, we’ll see. If inflation does wake up again, it could be a problem for both the equity risk premium and term premium, both of which are on the low side of their historical range.