Inflation. Inflation. Inflation.That is number one topic in markets at the moment and we are not likely to see the focus shift before the next Fed policy meeting on 4 May.The bond market remains a key driver of trading sentiment, as evident with the somewhat parabolic rise in yen pairs since March trading. The price action there mimics the surge higher in bond yields during the period.All of this comes as inflation is rampaging higher and is putting central banks under the microscope.That said, there are certain quarters in the market that are coming around on the idea of ‚peak inflation‘. That may be something that could play out in the weeks/months ahead as central banks also adopt a similar view. If so, what comes next?It’s all about data at the end of the day and if inflation pressures are showing signs of slowing down, it could very well drive yields and the US dollar in the opposite direction. The greenback has benefited strongly from the market pricing in a rather aggressive Fed but the rates outlook may not be as bullish if ‚peak inflation‘ attaches a ceiling on policy action.Besides, can you say that the market isn’t quite prepared for 2.50% to 3.00% Fed funds rate now? Certainly not. Pretty much everyone is expecting such a trajectory in this cycle. As such, talk of ‚peak inflation‘ will present risks to that outlook and we could see some pushback to the recent market movements.But for now until 4 May, things aren’t likely to change. Central banks will dominate proceedings in the weeks ahead but let’s also not forget about month-end trading coming up next week.