Insights

Investors may be approaching “peak good news” on inflation, but sustaining that progress may require the Fed to remain tighter for longer.

Headline PCE inflation rose 0.3% in August and 3.4% year over year, while core PCE increased 0.2% and 3.0%, respectively. Both readings were softer than expected, while the 42 Macro PCE Deflator Breadth Models showed early signs that inflation pressures are narrowing.

However, the 10-year Treasury yield climbed to approximately 5.28%, while the 30-year reached 5.62%, continuing to add pressure on stocks and reinforcing the Fed’s need to maintain credibility with the bond market.

In our view, the FOMC must continue to tighten cyclically to create room to ease more aggressively later, what we call “Play-Action Pass…

The AI CapEx bubble’s increasing reliance on circular financing is overwhelmingly bullish…for now.

Confused…

Bulls argue that transferable compute serves as collateral for debt capital and circular financing could provide more runway for the buildout. 

Bears argue that the same structures that can reduce capital impairment risk for creditors may also inflate industry demand, asset valuations, and concentration risk.

Frustrated…

Stay calm. Investors who stay on the right side of this equation and know when to act will profit from this dynamic.

If that’s not enough pressure, another potential pivot is developing as markets transition from earnings season to…