Last night’s CPI just blew up, and tonight’s PPI flipped the table. The data came in way above expectations… any hope for a market rebound got crushed. Yesterday, CPI was about 0.1% higher than expected. Energy, especially gasoline, was the main driver, but housing, cars, and clothing were also climbing, which shows the pressure isn’t just from oil prices. Looking at the two days together, the energy shock isn’t just a one-off disturbance at the CPI level—it’s going to keep passing through to the consumer side. PPI year-over-year surged to 6.3%, way higher than CPI, so don’t expect CPI to ease up easily in the coming months. For the Fed, this PPI report basically confirms the need for another rate hike. Policy-wise, the Fed just raised 25 basis points in September, bringing the target range to 3.75%–4%. The market was originally betting on a pause in October and another move in December. But with two days of inflation data exceeding expectations, the tone at the October meeting will get tougher, and the rate-cut narrative won’t hold up. For the market, U.S. Treasury yields and the dollar still have short-term upside momentum, while stock valuations are under pressure. By the way, both the Philly Fed and NY Fed manufacturing indices are above 20. U.S. manufacturing is seeing both volume and price increases this round, so the recession narrative doesn’t have a foothold for now. Risk assets are under short-term pressure, but the long-term outlook remains positive. Oil prices are the only potential game-changer here.