The CPI data has fallen as expected, which should be a cause for celebration, but currently, the renewed conflict between the United States and Iran has turned the declining inflation data into "something of little value."

The decline in inflation was originally due to falling oil prices; however, whether it’s the renewed blockade of the Strait of Hormuz or the U.S. claiming a 20% tax, both indicate a greatly increased probability of oil prices continuing to rise from their current levels.

From the inflation data, the broad CPI is significantly lower than market expectations, dropping from 4.2% last month to 3.5%. If the U.S. and Iran can maintain peace, next month’s broad inflation should be even lower, but now the market is worried about rising oil prices, making this inflation drop unhelpful for the Federal Reserve's monetary policy.

The core CPI being below expectations should also be a good thing, decreasing from 2.9% to 2.6%, indicating that inflation caused by rising oil prices has eased, which is still very good data, even with the CPI’s month-over-month rate dropping to -0.4%.

Originally, even if the market could not predict a rate cut, it could at least anticipate a decrease in the likelihood of the Federal Reserve raising rates, but now both of these decent data points are nearly useless, unless it’s Trump TACO.

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