509 JonyDong

🔥 NFP beat hard. CPI refused to cool. Is the Fed about to throw a 25 bps cold shower?
My take: yes, the Fed now leans toward a 25 bps hike. Not because CPI alone is a magic button, but because the whole chain is getting hard to ignore.
📊 1. Jobs first, CPI second
August NFP came in at +162k, while the market was looking for roughly +65k. That is a big gap. It tells the Fed the labor market is not cracking yet.
Why does that matter?
• More people working
• Income still coming in
• Consumers still spending
• Companies still able to pass some costs forward
So when CPI stays sticky, the Fed can say: the economy probably has enough cushion for one more hike.
📈 2. CPI trend: better than 2022, but not solved
U.S. inflation has improved a lot since the post-Covid shock:
• 2021: CPI around 7.0%
• 2022: around 6.5%
• 2023: around 3.4%
• 2024: around 2.9%
• 2025: around 2.7%
• Aug 2026: back at 3.4% YoY, with +0.4% MoM
So yes, inflation is no longer on fire like 2021-2022. But it is also not walking nicely back to the Fed’s 2% target. It went downstairs, stopped halfway, and started checking the gasoline bill again.
⚠️ 3. The micro logic: inflation hides in small receipts
CPI is not just a macro chart. It is built from boring, real-world pricing decisions:
• Landlords renewing rent
• Restaurants adjusting menus
• Airlines changing fares
• Trucking firms paying more for diesel
• Retailers deciding whether to protect margins
The August CPI report showed gasoline +3.9% MoM, energy +16.3% YoY, shelter +3.0% YoY, and services excluding energy services also +3.0% YoY.
That is not panic inflation. But it is definitely not “mission accomplished.”
🛢️ 4. War risk makes the Fed’s problem uglier
The PPI side matters because it shows pressure before it fully reaches consumers. August PPI rose 0.4% MoM and 5.4% YoY. Diesel jumped 24.1% in one month.
Diesel is boring until it is not. It sits inside trucks, warehouses, shipping, food distribution, construction materials. If diesel rises, the customer may not see “diesel” on the receipt, but somehow the noodle, delivery fee, or supermarket basket gets more expensive. Very mysterious. Very familiar.
That is the real risk:
NFP beat -> demand holds -> CPI sticky -> energy/freight costs rise -> firms pass costs forward -> inflation expectations get sticky.
🎯 My base case
The current Fed target range is 3.50%-3.75%. A 25 bps hike would move it to 3.75%-4.00%. After CPI/PPI, market pricing has moved strongly toward a hike, with several reports citing FedWatch-based odds around 90% or higher.
So my view is simple: 25 bps hike is more likely than a clean hold. If the Fed holds, I expect a very hawkish hold, basically: “don’t start the party yet.”
🟡 Bullish or bearish?
Short term, I am cautious on risk assets. Not full bearish, but definitely not blindly bullish.
Gold still makes sense to me as insurance in this environment. When war risk, sticky inflation, and policy uncertainty all sit on the same table, gold becomes less of a “boring asset” and more like a seatbelt. You hope you don’t need it, but you don’t want to drive without it either.
Crypto long term? Still constructive.
Crypto around CPI/FOMC week? Smaller size, cleaner stop, less ego.
The market does not give medals for getting liquidated with confidence.
What do you think: Fed +25 bps, or hawkish hold? Drop your view below 👇
#CPIWatch