Causal implications · Inflation · 2026-09-25
Sticky High Inflation: Supply Shocks Counteracting Monetary Restraint
HA·C:M
Regime read
Persistent price pressure remains entrenched despite a 3.88% Fed Funds rate, as WTI at $96.41 drives cost-push effects. The 10Y yield at 5.11% reflects a significant term premium build, suggesting markets doubt a rapid return to target. High tariffs and energy costs likely offset the disinflationary impact of current nominal rates.
Transmission channels (asset · direction · mechanism)
CPI yoy
▼lower
Intertemporal substitution and demand destruction via higher real rates and tighter financial conditions.
-0.25 ±0.12 pp yoy peak24m
CPI Core Goods
▲higher
Direct pass-through of import costs to retail prices with zero offset from foreign exporter prices.
+0.50 ±0.20 pp12m
CPI yoy
▲higher
Direct energy component pass-through and secondary transport/production cost increases.
+0.20 ±0.08 pp peak12m
Real GDP Growth
▼lower
Inflation-driven erosion of real income and restrictive policy response reduces the fiscal multiplier.
magnitude uncertain12m
Exposed sectors / factors
Consumer DiscretionaryUtilitiesFinancialsEnergy
What confirms it
- ▲Core PCE Persistence
- ▲10Y Breakeven Inflation Rate
What would invalidate it
- ▼Rapid Labor Market Cooling
- ▼Industrial Production Contraction
No verifiable public source recorded for this card.
Earlier readings
- 2026-10-21Restrictive rates face supply-side tailwinds as oil breaches $100.
- 2026-10-20Sticky Inflation at $100+ Oil Forces Curve Bear-Steepening Risk
- 2026-10-19Inflation persistence forces 'higher-for-longer' yields, challenging growth valuations.
- 2026-10-16Sticky Inflation Sustains Upward Pressure on Long-End Yields and Real USD
- 2026-10-15Sticky Inflation Sustains Upward Pressure on Term Premiums and Dollar Carry.
- 2026-10-14Sticky Core PCE at 3% and $96 Oil Enforce Restrictive Policy Floor.
- 2026-10-13Sticky inflation maintains upward pressure on long-end yields and US dollar strength.
- 2026-10-05Structural stickiness amid positive output gaps and energy-driven cost-push pressures.
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