CPI and core both came in hotter than expected — 3.7% vs 3.6% consensus for headline and 2.6% vs 2.4% for core — and the thesis is that inflation is re-accelerating from the summer lull because oil is still rising. That keeps the Fed pinned between a supply shock and markets that already see the policy path as tight, with the 2-year yield, 10-year, 20-year, and 30-year all staying elevated and long-end yields likely to remain up until after the midterms. The spillover is broad: housing and transportation are still adding materially to CPI, Russell is under pressure, the dollar is firming, metals are weak, and BTC has 83k as the line in the sand. The last segment ties the macro view to a near-term Fed meeting in 2 weeks and a conference ticket deadline before Nov. 1.
CPI Y/Y printed 3.7% vs 3.6% consensus and 3.4% last month; core printed 2.6% vs 2.4% consensus and 2.4% last month.
Inflation is re-accelerating after the summer slowdown, with oil identified as the main driver.
Oil topped in March and bottomed on July 2; the notes pair that with inflation peaking in May and bottoming in July.
Oil is still trending higher, and that is expected to feed into next month’s inflation report.
The stated presidential plan is to avoid dealing with Iran until after the midterms, which keeps the oil/inflation risk open into that window.
Housing is still rising and is described as not helping inflation; the notes say housing has been as much as roughly 2/3 of headline CPI in the past, but now contributes about 1.5% of the 3.7% headline print.
Transportation inflation is accelerating since early 2026, is said to be higher than basically since 2022, and contributes about 1.3% to headline CPI.
Medical care inflation is dropping and is running at only 1.5% annualized, despite the claim that underlying medical costs are rising quickly.
Rising energy prices are framed as a supply shock forcing the Fed to be more restrictive, with fed funds about 75 bps below the speaker’s estimate of neutral.
The Fed funds rate is described as chasing the 2-year yield, while the 30-year has come down a lot and is starting to turn back up; the base case is elevated long-end yields until after the midterms.
The long end is said to usually rise into midterms and fall after them; 2022 is cited as topping in late October with a lower high around the midterms, and 2018 as topping in early October and holding around that level into early November.
Market odds on an October hike are now described as essentially a coin flip, and the next Fed meeting is only 2 weeks away.
The World Uncertainty Index has been elevated since 2025 from economic-policy changes, while the Economic Policy Uncertainty Index has eased but remains above normal; that uncertainty is tied to larger market swings.
The dollar is said to be moving higher, with a short-term target of 103 and a revised 1-year-ish target of 105-106.
BTC has 83k as the line in the sand; daily moves are downplayed versus weekly closes, and crypto is described as down a little today.
Russell is struggling and keeps going down because rates stay elevated, while metals are also struggling for the same reason.
The Dow is said to be down about 7%-8% while the S&P is only down about 1%; the divergence is expected to resolve with either Russell catching up or the S&P catching down, with 2018 and 2024 given as examples of the S&P eventually following the weaker small-cap tape.
The conflict around Iran is said to have been 'ended' about 57 times in the news over the last year, but oil is said to be ignoring headlines and likely to keep rising until the conflict ends or a recession hits.