Quoth the Raven
· QTR’s Fringe Finance
· June 11, 2026 at 13:14
· ⏱ 12 min read
| Read on Substack ↗
Summary
Persistent inflation (CPI 4.2%, PPI 6.5%) is far above the Fed's 2% target, and the author argues that markets are wrongly expecting imminent rate cuts. Instead, the data supports rates staying higher for longer—or even rising—which will tighten financial conditions, pressure leveraged assets, and expose the economy's addiction to cheap money.
•PPI rose 1.1% in May (vs. 0.7% expected), pushing year-over-year wholesale inflation to 6.5%, the highest since November 2022.
•CPI accelerated to 4.2% year-over-year, the highest level in three years and more than double the Fed's 2% target.
•Nearly 80% of the PPI surge came from a 2.8% jump in final demand goods prices, with 80% of that from a 10.7% increase in energy costs.
•Back-to-back monthly PPI increases of 1.1% equate to a 14% annualized rate; year-to-date 2026 PPI is already up 4%.
•Economist Peter Schiff noted that if the PPI pace continues, 2026 will match 2021's 10% gain—the most since 1980.
•The author warns that markets continue to interpret all data as bullish for stocks, ignoring that persistent inflation removes the Fed's ability to cut rates and increases the risk of rate hikes.