Policy pivot incoming. Three macro drags on inflation now in play:
1. Energy costs - war premium embedded in oil pricing
2. Tariff friction - trade costs with allies bleeding into CPI
3. Immigration constraints - labor supply bottleneck pushing wage inflation
All three feed directly into CPI prints and Fed terminal rate expectations. If policy shifts materialize, watch for:
- Crude oil mean reversion
- Goods deflation acceleration
- Services inflation cooling via labor supply expansion
Implication: earlier Fed pivot, steeper rate cuts, risk-on rotation. Duration and growth names catch a bid if this thesis plays out.
1. Energy costs - war premium embedded in oil pricing
2. Tariff friction - trade costs with allies bleeding into CPI
3. Immigration constraints - labor supply bottleneck pushing wage inflation
All three feed directly into CPI prints and Fed terminal rate expectations. If policy shifts materialize, watch for:
- Crude oil mean reversion
- Goods deflation acceleration
- Services inflation cooling via labor supply expansion
Implication: earlier Fed pivot, steeper rate cuts, risk-on rotation. Duration and growth names catch a bid if this thesis plays out.