What does this say about inflation and policy? 👀 Rate cut in the next 1-2 meetings is unlikely on this data. 🚨 Implications & Scenario Analysis 1⃣ Rate cut under these conditions Market reads it as: “Fed prioritizes growth/financial stability over inflation target.” → Likely outcomes (short/medium term): USD weaker, yields lower at the front end, curve steepening. → Risk assets (equities, credit, crypto) rally on liquidity + lower discount rates. → Inflation expectations move up: Breakevens widen, gold/real assets bid. → Medium term, if inflation actually re‑accelerates, the Fed may be forced into a later, harsher tightening (stop‑go policy to more volatility). Bullish for risk in the short run, but with credibility risk and higher inflation tail. 2⃣ Rates held (baseline) With these prints, “hold + hawkish tone” is the most coherent move. → Likely outcomes: Front‑end rates stay high; market gradually prices fewer/further‑out cuts. → Financial conditions remain tight: growth grinds, but no immediate shock. → Risk assets chop: Negative from higher real yields, but no outright “panic” signal. → Over time, if CPI/PPI stay hot, market begins to price non‑zero probability of another hike. Mild headwind for risk, supports “higher for longer” narrative, improves inflation‑fighting credibility. 3⃣ Rate hike Would be a strong signal: “Fed sees renewed inflation cycle and is acting pre‑emptively.” → Likely outcomes: Sharp risk‑off: equities and crypto sell off, credit spreads widen, USD strengthens, yields spike across the curve (especially front‑end). → Growth expectations drop; recession probabilities re‑price higher. → If successful, this front‑loads pain and can break the inflation impulse more cleanly, allowing cuts later from a higher starting point. Very negative for risk assets near term, but most effective against inflation if done early; politically and communication‑wise, it’s a high‑bar move. —————————————————————————————— CPI and especially PPI show a re‑heating inflation profile. That argues against imminent cuts and makes a “hold with hawkish guidance” the most logical path, with some risk the market starts to price a future hike if this pattern persists. A cut now would juice risk assets but damage credibility... ...a hike would hit risk hard but re‑anchor inflation expectations more forcefully. #AIforALL 🔆

JAPAN 20-YEAR YIELD RISES TO 3.605%, HIGHEST SINCE 1996

This just dropped and nobody is talking about it loudly enough: Wages rose 3.6% this year. Inflation is running at 4%. That means the average American worker just took a pay cut without anyone changing their paycheck. You worked harder this year than last year. You made more dollars. And you can afford less. That’s not a recession. That’s something quieter and more dangerous.

It’s as if clockwork. The yield on the 10-year U.S. Treasury bond has surpassed 4.50% for the first time since June 2025. This is the same level that triggered Trump’s “90-day tariff pause” in April 2025. Meanwhile, the next move anticipated from the Fed is now an interest rate hike. As a result, the average U.S. 30-year mortgage rate is nearing 7%, and inflation has reached its highest level in three years. Overnight, the policy of “higher for longer” has made a comeback. How long will this last?