By Michael Every of Rabobank
As has been the norm in 2026 to date, there are lots of distressing and borderline disturbing reports this morning and very little sign of progress where it’s needed. For once these surprises don’t all cluster in the messy world of geopolitics – and one is right in the middle of inflation and monetary policy.
Yesterday’s US CPI print came in hotter than expected at 0.4% m-o-m headline vs. a consensus of 0.3% and 0.3% core vs. a 0.2% market view. To put it in the words of the usually dovish Fed voter Goolsbee, “It’s another distressing report, borderline disturbing. We’ve been hoping to get progress.” Instead, we saw an acceleration in grocery and food inflation, persistent housing/shelter price pressure, and a delayed pass-through from earlier energy shocks feeding into medical care, household furnishings, and other daily expenses.
The reaction in US 2-year yields was dramatic - they jumped 19bps while 10-year yields rose 14bps to briefly go back above 5% again; today, we have a Bloomberg story talking about the possibility of a 50bps hike from the Fed!
Of course, that US yield spike came just after everyone rushed back into Treasuries after the AI and bullish oil trades hit an air pocket with last week’s US election on the view that the former is likely to be slowed down and that we are closer to peace than war in the Middle East on the back of the recent Democrat Blue Tsunami. Now imagine if either of those were not the case.
On AI, nobody knows what will happen next. However, as headlines along the lines of the old Bond film ‘The Spy Who Loved Me’ swirl around the Nvidia CEO, the Financial Times headline today is that Anthropic’s bankers are preparing to increase its IPO valuation to $1.5 trillion.
