INFLATION DATA COMES IN LINE WITH EXPECTATION. - CPI: 2.4% vs 2.4% expected - Core CPI: 2.5% vs 2.5% expected So inflation isn’t flashing warning signs yet. But that could change next month as oil prices continue to surge. Extremely elevated oil prices tend to do three things: 1. Add inflationary pressures globally 2. Headwind for consumer spending 3. Fed rate cut killer In terms of inflation, oil above $100 for any sustained period of time will see inflation levels surging across the world. Inflation in the US would likely rise to well above 3% in the near-future if oil lingers above $100. Then, there are also economic growth concerns on top of that. An extreme, rapid, and sustained oil price spike could drive "demand destruction” across the world as consumers and businesses cut back on spending elsewhere. If the oil price remains above $120, this would likely spark serious concerns for economic growth in the US and elsewhere. Finally, higher oil prices and higher inflation levels kill hopes of central bank interest rate cuts. Already, interest rate traders have moved to price in a higher probability of a 2026 interest rate hike in some areas like the EU and the UK. Expectations of Fed interest rate cuts in 2026 have also been slashed from more than two to between one and two.