Iran War Keeps Fed’s Inflation Gauge Above Inflation Target - WSJ
Macro
Iran war-driven energy costs are keeping the Fed's preferred inflation gauge above target, with readings hitting their highest levels since 2023, complicating the rate path under new Fed Chair Kevin Warsh. Stagflationary pressure — rising prices alongside slowing growth and depleted consumer savings — sets up a prolonged higher-for-longer rates environment that squeezes rate-sensitive equities and supports energy and inflation-hedge trades.
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Angle
↔ PAIR+4% target-2% stop4-8 weeks
Short TLT and XLY while going long XLE and TIP — stagflation/higher-for-longer backdrop punishes long duration and discretionary, rewards energy and real return assets.