The Single Factoral Terms of Gasoline*
A recent spike in gasoline prices has drawn attention, though the absolute level remains lower than the peaks seen in 2005‑08, 2011‑14, and 2022. The author notes that a price of $5 per gallon is likely needed before ordinary consumers feel a significant squeeze on other spending. Meanwhile, real purchasing power for workers has already eroded, raising concerns about a broader downturn in consumer spending. If high fuel costs persist, the economy could see a pullback in real‑term household expenditures.
Workers of the US: Were You Better Off in February 2026 than Today?
The latest analysis of average hourly earnings, expressed in CPI‑deflated 2025 dollars, shows a modest decline from early 2025 levels. Using the Cleveland Fed nowcast and Bloomberg consensus, real wages are trending lower, while the AIER Everyday Price Index paints...
March CPI Inflation Preview: Q/Q AR at 5.2% to 5.9%
The Cleveland Federal Reserve’s nowcast projects March headline CPI rising at an annualized quarter‑on‑quarter rate of 5.2%‑5.9%, slightly above the Bloomberg consensus. The nowcast blends recent CPI and PCE releases with daily oil and gasoline price data, indicating inflation remains...
Upward Shift: Market-Implied Path of 3 Month SOFR, Pre-War Vs. Now
The secured overnight financing rate (SOFR) now trades about 23 basis points above the Federal Reserve’s median funds‑rate projections for both year‑end 2023 and the end of 2027. This premium emerged after the war in the Middle East shifted market...
“Liberation Day” Plus One Year
A year after the so‑called "Liberation Day," the Yale Budget Lab finds that U.S. tariff costs are now passed through to consumers at a 76% rate, reaching 100% for many durable goods. Fed Chair Jay Powell estimates tariffs are adding...
Economic Policy Uncertainty in the Wake of “F*****’ Strait” Post
The latest Economic Policy Uncertainty (EPU) chart shows the index hovering around 791 despite former President Donald Trump’s profanity‑filled Easter‑day threat to close a strategic strait. Analysts expected a sharp spike, but the data remained flat, suggesting market participants discounted...
Nonfarm Payroll Employment in 2026: More Volatile?
The Bureau of Labor Statistics (BLS) Current Employment Statistics (CES) nonfarm payroll series appears more volatile in 2026 compared with the ADP private‑sector estimate. The divergence cannot be clearly tied to the February nurses strike or to the new birth‑death...
Daily Data on 5 Year Inflation Expectations
The 5‑year Treasury‑TIPS breakeven spread rose 14 basis points through March 31, reaching a 21‑bp gain by April 3, while the DKW model’s five‑year inflation expectation increased 10 basis points over the same window. A simple conversion suggests that a 10‑bp rise...
Trump Credibility Measured
A TruthSocial post by former President Donald Trump used threatening and blasphemous language, prompting a brief media spotlight. Kalshi, a regulated prediction‑market platform, tracked bets on the number of vessels transiting the Strait of Hormuz from March 30 to April 5. The...
Manufacturing Employment and Hours
Recent data show US labor‑force participation slipped to 61.9% in March, the lowest in over four years. Total non‑farm employment fell 1.14 million since December and is down 661,000 year‑over‑year, pushing the employment‑to‑population ratio to a 53‑month low of 59.2%. Manufacturing...
Nowcast, Tracking of Private Domestic Final Demand (Aka “Core GDP”)
The Atlanta Fed and Goldman Sachs nowcast shows private domestic final demand, often called “core GDP,” is decelerating. The latest chart reveals growth falling below the 2023‑24 stochastic trend and the March Survey of Professional Forecasters median. All nowcasts rely...
Business Cycle Indicators – Data Before the War
The NBER Business Cycle Dating Committee released updated coincident indicators covering nonfarm payroll, monthly GDP, retail sales, ADP employment, and freight services, all normalized to January 2025. Preliminary benchmark revisions show a modest slowdown in nonfarm payroll growth and a deceleration...
Anticipating April 10 (March CPI Release)
The Cleveland Federal Reserve nowcast shows headline CPI rising 0.84% month‑over‑month in March, driven largely by sharp increases in gasoline and diesel prices. Weekly gasoline prices are up 26.2% year‑over‑year, while diesel has surged 50.4% over the same period. By...
Famous Last Words: “Get Your Own Oil”
The article highlights that front‑month Brent and WTI futures have moved in lockstep since 2022, underscoring a highly integrated global oil market. It rebuts former President Trump’s claim that U.S. oil prices consistently diverge from world prices, labeling the view...
How Much Will Reported Confidence Decline in March?
The Conference Board will release its March consumer confidence index tomorrow, with a nowcast estimate of 86.6 points based on a regression model that incorporates University of Michigan sentiment, gasoline price growth, and lagged confidence. Bloomberg’s consensus forecast is slightly...
113 Years of the Real Oil Price (WTI)
The article visualizes 113 years of CPI‑adjusted WTI oil prices, highlighting both absolute levels and growth rates. It notes that the 2008 year‑on‑year surge of 640% was the largest, surpassing the 1979‑80 increase that foreshadowed the 1980 recession. However, month‑on‑month...
Brent: Closing in on Post-Strike Highs
Brent crude futures are climbing toward the highs seen after the recent oil strike, even as broader markets show unusual alignment. Meanwhile, U.S. agriculture is under pressure, with farm numbers down nearly 150,000 over five years and farmland shrinking by...
S&P 500 Forward P/E Ratios
Yardeni’s latest chart shows the S&P 500’s forward price‑to‑earnings ratios diverging sharply across market segments. The so‑called Magnificent Seven tech‑heavy stocks are trading above a 30‑times forward P/E, while the broader large‑cap index sits near 22‑times and small‑to‑medium caps hover around...
Federal Budget, Economic Report of the President, 2026 Coming Out April 3
The White House will release the FY 2026 federal budget on April 3, three months later than the statutory February 2 deadline. The accompanying Economic Report of the President must follow within ten days, setting the fiscal agenda for the...
What’s the Plan?
Betting platforms Polymarket and Kalshi indicate a 70% probability that U.S. forces will enter Iran by April 30, while forecasting a peak WTI price of $145 per barrel by 2026. Both markets also show recession odds climbing to 36% for that...
Five Year US Treasury CDS
The five‑year U.S. Treasury credit default swap (CDS) curve has surged since late 2024, spiking amid heightened geopolitical tension and domestic policy scrutiny. The graph shows a sharp rise around July 2025, coinciding with the investigation into Fed Chair Jay Powell,...
Sentiment Dives to Near “Liberation Day” Levels
The University of Michigan’s final March consumer sentiment index slipped to 53.3, down from the preliminary 55.5 reading. Expectations fell 4.9 points from February, outpacing the 2‑point dip in current conditions caused by higher gasoline prices. Analysts attribute the broader...
Naval Deployment as of March 23
The U.S. Navy’s March 23 deployment map shows five carrier strike groups and two amphibious ready groups positioned across the Atlantic, Mediterranean, and Indo‑Pacific theaters. Key assets include the USS George H.W. Bush and USS Nimitz operating near Europe and the Indo‑Pacific, the...
Dollar Dominance in Central Bank Reserves
The IMF’s COFER database shows the U.S. dollar still commands roughly 60% of global foreign‑exchange reserves, keeping its status as the premier reserve currency. Over the past decade the euro and Chinese yuan have inched upward, while the British pound...
SOFR Path Change Relative to 2/27
The Atlanta Federal Reserve’s Market Probability Tracker released a revised three‑month average SOFR outlook covering June 2026 through December 2028. The new projection lifts the expected rate path relative to the February 27 forecast, placing the current target range at 350‑375 basis points....
The Five Year Inflation Breakeven at 2.66%
The five‑year Treasury‑TIPS breakeven inflation rate has climbed to 2.66%, marking a 0.26‑percentage‑point increase since the onset of the war. The rise is captured alongside the DKW model’s inflation expectations, both plotted against the Treasury spread. A parallel chart links...
Regular Folk Prices
The Cleveland Federal Reserve released a nowcast for March headline CPI that blends traditional CPI and PCE data with daily oil and weekly gasoline prices. Rising oil prices—Brent near $109 and gasoline at $3.72 per gallon—are pushing the nowcast upward....
Deployment of ARG Tripoli, Betting on Hormuz Re-Opening
The U.S. Navy has transferred the Amphibious Ready Group (ARG) Tripoli, together with THAAD and Patriot air‑defense systems, from the Indo‑Pacific to the Middle East. Prediction‑market data show the probability of the Strait of Hormuz returning to normal traffic has...
The Goods Trade Deficit Adjusted for Gold
The latest balance‑of‑payments data shows that when the U.S. goods trade balance is adjusted for gold, the deficit expands beyond the headline figure. The red line in the chart, representing the gold‑adjusted balance, sits noticeably lower than the blue unadjusted...
Oil Futures in War
Kevin Hassett highlighted on CBS Face the Nation that oil futures are pricing a rapid decline in oil prices, even as spot gasoline prices surge due to current Strait disruptions. The forward curve suggests Brent will not revert to its pre‑war...
Miran’s Next Vote
Polymarket now prices a 98% chance that Fed governor Stephen Miran will dissent from the upcoming Federal Reserve decision, up from 89.1% after the Iran war began. The odds surge highlights heightened market focus on any deviation from the committee’s...
Hassett on the Economic Impact of the US-Israel-Iran War
Kevin Hassett told CBS’s Face the Nation that the US economy will not be harmed by the US‑Israel‑Iran conflict, citing abundant domestic oil production and a steep decline in futures‑based oil prices. He argued the temporary 20% disruption to global...
The Oil and Energy Intensity of US GDP
The chart shows U.S. petroleum intensity of real GDP falling sharply since its 1973 peak, with overall energy intensity also on a long‑term decline. This reduction means that oil price shocks now have a muted effect on output and inflation...
Instantaneous PCE Inflation with Nowcasts/Tracking
Goldman Sachs’ tracking model nudged its February core PCE inflation nowcast higher, while the Cleveland Federal Reserve’s nowcast suggests lower instantaneous inflation for February and March. The two estimates diverge because Goldman Sachs blends judgmental inputs with data, whereas the...
Towards Correction?
The S&P 500’s aggregate valuation masks a stark split between the high‑flying Magnificent 7 and the rest of the market. Forward price‑to‑earnings ratios for the Magnificent 7 are significantly higher than those for large‑, mid‑, and small‑cap indices. While the Magnificent 7 index has...
Pre-War/Conflict/”Excursion” GDP, Core GDP, and Nowcasts
The Atlanta Fed’s GDPNow nowcast for Q4 2025 shows a modest slowdown, trailing the Survey of Professional Forecasters (SPF) projection. Goldman Sachs, assuming a 21‑day Strait of Hormuz disruption, trims its growth estimate from 2.5 % to 2.2 % year‑over‑year. The SPF survey, collected...
Business Cycle Indicators: GDP Growth Downshifts, Consumption Slows, Downside Surprise
The latest business‑cycle data show Q4 GDP growth slashed by roughly half compared with the prior estimate, while consumer spending missed consensus by almost 0.5 percentage point on an annualized basis. Revised non‑farm payroll figures indicate a modest downward bias...
Uncertainty Regarding Trade Policy Remains High
Analysts warn that a prolonged closure of the Strait of Hormuz could drive crude oil prices well above $150 per barrel, far exceeding historical peaks. Historical data from 2011‑2014 shows oil consumption grew despite high prices, underscoring demand resilience. Economists...
Some Numbers for SecTreas Bessent for Benefit Risk Assessment
U.S. Treasury Secretary Scott Bessent signaled that the Navy, possibly with allies, will escort commercial vessels through the Strait of Hormuz once militarily feasible. The post lists ball‑park costs: a Constellation‑class frigate at $1.3 billion, a LCS at $500 million, a VLCC...
Betting on Recession 2026: Up to 32% Fm 21% Pre-War
Market‑based platforms are signaling a notable recession risk for the United States by the end of 2026. Polymarket’s probability sits at 32%, down from a recent 37% peak, while Kalshi’s odds have climbed to 31.6% after a February surge. Goldman...
“How Energy Prices Figure Into the Fed’s Interest Rate Decisions”
The Federal Reserve’s rate‑setting calculus is increasingly tied to volatile energy prices, which have surged amid geopolitical tensions and supply constraints. Market participants are using SOFR and Fed Funds futures to price the likelihood of upcoming policy moves, with recent...
Grocery Prices Continue to Rise
Grocery prices are climbing faster than last year, according to recent CPI‑food‑at‑home data. The Bureau of Labor Statistics shows a year‑over‑year increase of about 5% in the first quarter of 2024, outpacing the 2023 rate. The Economic Research Service’s forecast...
Trump: “The Straits Are in Great Shape”
Brent crude futures are again nearing the $100 per barrel threshold as market volatility climbs. The United States crude price volatility index has surged alongside spot price gains. Analysts estimate only a 45% chance that Strait of Hormuz traffic will...
Seems Plausible: Recession in 2026
Polymarket’s recession contract defines a U.S. recession as an NBER declaration for any quarter in 2025 or 2026, issued before the BEA releases its Q4 2026 advance estimate. Because the NBER typically confirms recessions with a lag, the contract’s definition lowers...
Brent Prompt Futures Open at +$108
Brent prompt futures opened above $108 per barrel on NYMEX, marking a notable price surge. The rally is driven by OPEC+ output cuts, lingering Middle East tensions, and a weakening dollar that favors commodities. Analysts warn the $108 level could...
Market Expectations of Inflation
Friday’s 5‑year Treasury‑TIPS breakeven spread sits above the Federal Reserve’s 2 % inflation target, mirroring the Federal Reserve’s Dodd‑Katz‑Wright (DKW) expected inflation series. Both metrics suggest market participants price in CPI inflation well above 2 % for the medium term. Kalshi’s latest...
Fed More Likely to Stay Pat?
The Federal Reserve is expected to keep interest rates steady, prompting the dollar index to climb and Treasury 10‑year yields to rise about nine basis points. Higher yields reflect tighter monetary expectations, while the 10‑year TIPS also edged up six...
Interpreting the Shrinking Term Spread
The 10‑year versus 3‑month Treasury spread has been compressing sharply, as high‑frequency data show a pronounced narrowing. Analysts note that the traditional term premium calculation omits heightened default risk, which is evident in rising U.S. Treasury CDS spreads. When inflation...
Guest Contribution: “Understanding Bond-Stock Price Comovements”
The article examines how Treasury bond returns move together with U.S. stock returns, showing that comovement has shifted from positive in the 1980s to negative in the 2000s and back to positive after 2022. Using rolling 90‑day regressions on daily...
“Liberation Day” Interpreted Through the Lens of the Benchmark Revision
The latest benchmark revision of the All‑Employees Total Nonfarm Vintage index reveals that post‑Liberation Day employment figures are weaker than previously reported, especially for August. The revised data shows a sharper decline during months associated with tariff policies, while months...
