A Fresh Look at Inflation

Stagflation & the potential for another Inflation Wave

An update on inflation is in order, particularly as Trump pours on the pressure for the Fed to cut rates (and yet the bond market smells a rat, doesn’t it)…

At first glance, this morning’s CPI prints suggested slightly softer data, with Bloomberg wasting no time flagging that core inflation undershot the median forecast for the fifth straight month led by autos and airfares/lodging (despite the hottest headline print since January and an uptick YoY from the prior three months 2.8%):

Source: Bloomberg

Tariffs are indeed starting to show up in more trade-sensitive items such as appliances, toys, and sporting goods, but the argument continues to be made by many that this is transitory:

Source: Bloomberg

My view diverges from the consensus that goods tariffs can be looked through since services should be impacted by a weakening housing and labor market (as discussed in charts here over the weekend).

Here’s what I see: