Inflation is 'resolved'... just like geopolitics

As noted yesterday, we must consider the geopolitical/economic backdrop carefully when thinking about trends in inflation. Or we can look at softer-than-expected CPI prints in the UK (due to survey timing) and the US (where core CPI at 0.23% was all of 0.02% from rounding up to the 0.3% m-o-m consensus) and yell, “RATE CUTS!” Due to short covering the latter is what happened: down went yields and the dollar; up went stocks. But what of that geopolitical/geoeconomic backdrop? Yes, Israel and Hamas agreed to a ceasefire and a hostage release. However, anyone who thinks the Middle East is now ‘resolved’ understands nothing about it. Arguably, the same is true for inflation even after those UK and US data.