Note this is still not taking into account the impact of the rise in fossil fuels since the beginning of the Ukraine War, as most of the volatility has taken place after sanctions were imposed globally.
(Though, for what it’s worth, commodities did get thoroughly crushed in trading yesterday.)
Interest rate futures are pricing in a 95% chance of a 0.25% rate hike by the Fed following the inflation print.
Days of Sunshine 
Predictions?
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To be honest, I am having a difficult time seeing anything that is going to moderate inflation in a meaningful way. Before the Ukraine War started, I think the Federal Reserve could have managed to tamp down inflation with an aggressive series of rate hikes, which the bond market was in fact pricing in (essentially trying to force the Fed to act on).
I’ve always thought the Fed’s biggest problem was that it was stacked with Boomers who – despite the Fed’s explicit mandates – mainly wanted to protect the risk assets that comprise most of Boomers’ wealth (stocks and real estate) and are intent to keep rates artificially low forever, even if inflation gets pretty bad, because it benefits that generation personally.
But you add in the war, between two countries that are significant players in commodities on the world stage, which is frustrating global trade (both because of sanctions and because of global trade routes), I don’t know. Plus one thing I have been mentioning that I don’t think anyone is taking into account yet, is that Russia and China are not only hoarding commodities but things that are intensive users of commodities like fertilizer. All of this could put pressure on prices for things like food. And we don’t even know what China’s true intentions are right now.
Our politicos on both sides seem to have no interest in doing anything about inflation or making the US supply chain less fragile. All they want is to shitpost on Twitter about who is to blame. Democrats think they can fight inflation with more inflationary spending. Republicans want more fossil fuels, but can’t seem to comprehend that our energy companies are global operations, not non-profit organizations with Patriots Only by-laws. (Actually, I think they do fully understand that, but are selling a fantasy to the plebs that if we only create a gonzo market for their megadonors everything will be fine again.) But even if we do localize the supply chain for the purpose of financial stability, it is going to come at additional cost because US workers are not wage slaves like in other countries, and that’s before we get to the issue that half this country doesn’t want to do real work anyway (all of which add to the cost of living their own ways).
Inflation is not going to go away magically. It needs a concrete policy response. I’m not sure our super-petty idiocracy can summon one.
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I feel like American comfort is about to end.
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That’s a very good way to put it….
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