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US inflation data, railroad strikes, and investors plan to increase their exposure to energy stocks and bonds. The dollar declined ahead of [View in browser]( [Bloomberg]( US inflation data, railroad strikes, and investors plan to increase their exposure to energy stocks and bonds. Inflation data The dollar declined ahead of data on Tuesday that [is forecast]( to show headline inflation in the US slowed to 8% in August from 8.5% a month earlier. Meanwhile, Treasury Secretary Janet Yellen [remarked]( that the US economy can avoid recession, though that will require "some good luck." She told CNN that while the economy's growth rate was slowing, the labor market remained "exceptionally strong" with almost two vacancies for every worker looking for a job. Railroad strikes Tens of thousands of US railroad workers could be [on strike]( by the end of this week. Negotiators met through the weekend trying to reach a deal with two unions covering some 57,000 engineers and conductors. Ten other unions involved have reached tentative agreements, though these deals require ratification by members. Pressure [is building]( from industry groups and Republicans alike for Congress to intervene in the dispute, which the unions have been urging legislators not to do. President Joe Biden vowed his administration [would be]( the most pro-union in US history but workers say they don’t feel the wind at their backs from the White House. Energy boost Energy stocks and bonds are poised to get a fresh boost from investors positioning to benefit from the surging electricity prices and fuel shortages expected later this year. Two-thirds of respondents to an [MLIV Pulse survey]( -- which includes portfolio managers and retail investors -- plan to increase exposure to the sector over the next six months. They see electricity and natural gas prices driving global inflation and expect that Russia will choke off flows of natural gas to Europe, leading to shortages of key fuels this winter. Stocks gain European stocks and US futures [extended a rally]( and the dollar retreated as traders bet inflation is near peaking. S&P 500 contracts rose 0.6% as of 5:35 a.m. New York time. The [euro surged]( the most in six months against the dollar after a European Central Bank policy maker said further interest-rate hikes will be needed to curb inflation. Crude oil turned higher along with industrial metals. A rally [in Bitcoin]( is cooling as traders await US inflation data and monitor a seminal upgrade of the Ethereum blockchain. Coming up... It's a data-light session at the start of a busy week dominated by US inflation numbers on Tuesday. However, traders will look out for the USDA's WASDE crop report. The SALT conference takes place in New York City and the IAEA Board of Governors meet in Vienna. Earnings include Oracle. What we've been reading Here's what caught our eye over the weekend. - Housing markets face a [painful reset](. - Ukraine’s counteroffensive [gains momentum]( in east. - A [$60-million]( trading error. - Credit card firms, firearm purchases, and [a new merchant code](. - Biden to [formalize curbs]( on chip exports to China. - Same-sex marriage bill [in Congress](. - Carlos Alcaraz, and a [Grand Slam]( win. And finally, here’s what Joe’s interested in this morning Some prices or indexes you only hear about when they're going in one direction. A good example used to the Baltic Dry Index, which some people saw as a proxy for the global economy, since it measured shipping costs. People loved pointing out when it was going down, because that seemed to be ominous and scary. Then on the way up? Crickets. So to make sure we avoid anything like that these days, it's worth noting that there's been a [big plunge]( in European energy prices over the last few weeks. Here's a chart: Granted the absolute levels are still extremely high and punitive. But for the time being, they've stopped going to the moon. There's probably some fundamental story that you can tell about what's going on, but the thing I keep coming back to is a recent comment from fund manager Alex Turnbull, who pointed out that these lines increasingly lack informational value, due to lack of liquidity and leverage, owing in part to huge price swings. [Here's Alex](: "I'll point out that if you talk to your friendly prime broker about wanting to trade something, which realizes about 400% volatility on a good day, you may find that actual risk taking capacity in these markets is heavily constrained. And the information in prices is not quite what it once was. The other thing I would point out is that that can be both to the upside or to the downside. So we saw similar dynamics in coking coal for much of this year when people were concerned about Russian supply getting taken out of the market. But then China opened the border to Mongolia. So you took 17 million tons out from Russia, but then actually China just bought it all more or less. And then you also had Mongolia enter the market for a 36 million ton run rate currently. So as a result, coking coal went from say $250 to $600 briefly and is now back to $200." So yeah, prices went up a lot, and there may have been a disconnect from fundamentals. And there may be a disconnect from fundamentals right now. Still, it's a little bit of good news out there that's worth paying attention to. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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