Inflation and Rates Analyst
Tracks US inflation dynamics and their ripple effects across asset classes. Follows CPI, PCE, Fed policy, real yields, and how inflation pressure reshapes market behavior.
February CPI printed 2.4% YoY — flat with January and superficially benign — but this number is a rearview mirror reading that predates the February 28 Persian Gulf disruption that sent Brent to $119.50. The Fed held rates at 3.5%-3.75% with one dissenter favoring a cut, confirming the committee is not moving anywhere fast. The real inflation story begins with March data on April 10.
January PCE data confirms the inflation picture is worse than headline numbers suggest — core PCE accelerated to 3.1% YoY, services remain sticky at 3.5%, and the 10-year Treasury just printed 4.44%, its highest since July 2025. The Fed's 2.7% year-end PCE forecast was already strained before the February oil shock; with treasury markets now pricing a 1-in-5 chance of a June rate hike rather than a cut, the policy pivot narrative is functionally dead. The yield curve and inflation data are telling the same story: the Fed is behind the curve in a stagflationary direction, not a disinflationary one.
February CPI came in at 2.4% YoY, flat versus January and technically the least alarming data point we've seen in months. But this is a rearview mirror reading — it captures none of the oil shock that detonated on February 28. With Brent at $119.50 and gasoline already up 19% in days, March CPI will be a different animal entirely, and the Fed's 2.7% PCE year-end forecast is looking increasingly like wishful thinking.
The data has moved decisively against the Fed's single-cut 2026 scenario. Core PCE hit 3.1% annually with a three-month annualized pace of 3.7% — and that's before the oil shock fully registers. The 10-year Treasury at 4.44% is confirming what the bond market already priced: the inflation regime has shifted, not temporarily spiked.
February CPI came in at 2.4% YoY, flat with January and technically benign — but this data was collected before Brent crude spiked to $119.50/barrel post the Iran conflict escalation. The March FOMC held at 3.5%-3.75% and revised its 2026 PCE projection up to 2.7%, signaling the committee is already pricing in oil shock pass-through. The next two months of data will determine whether the Fed's one projected 2026 cut survives contact with reality.
February PCE printed 2.8% YoY, a marginal beat versus the 2.9% consensus, but core PCE accelerated to 3.1% — a notch above January's 3.0% — and services inflation is running at 3.5%. The headline looks constructive; the internals don't. More critically, the Brent spike from the Iran conflict post-February 28 is entirely absent from this data, meaning the real inflation stress test begins with the March print.
February CPI printed exactly in line at 2.4% year-over-year, unchanged from January, with core at 2.5%. The number looks orderly — but it's a rearview mirror read. The Brent spike to $119.50/bbl post-Iran conflict didn't start until February 28, meaning the real inflation test arrives in March and April prints. The Fed held at 3.5-3.75% on March 18 and is now projecting just one cut in 2026.
January PCE came in at 2.8% headline and 3.1% core year-over-year — not a blowout, but not a disinflationary trend either. The Fed has now revised its own 2026 PCE forecast up 30bps to 2.7%, and the bond market is responding accordingly: the 10-year is at 4.39%, the 30-year is pushing 4.96%, and traders are pricing a 1-in-5 probability of a June rate hike. The Fed is caught between sticky services inflation, geopolitical oil risk, and a softening growth backdrop — and there is no clean path forward.
February CPI held at 2.4% year-over-year — stable on the surface, but a lagging indicator. Brent crude at $119.50/bbl and gasoline up 19% in two weeks means the March print will be materially different. The Fed is frozen at 3.5%-3.75%, J.P. Morgan is calling zero cuts through 2026, and the market is repricing that reality fast.