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A HOTTER INFLATION BACKDROP, WITH A TWIST FOR STOCKS

No matter how you look at it, Sonu Varghese, Carson's global macro strategist, says the inflation picture isn’t great.

CPI is up 3.8% over the past year -- its highest since May 2023.

That’s showing up most clearly in bonds. Short- and long-term yields are at their highest levels this year, reflecting both the Middle East crisis and ongoing inflation pressure.

As Varghese put it in a Wednesday note, this is basically the inflationary growth environment they expected for 2026 -- but it’s not helpful for bond yields or borrowing costs.

The labor market is still holding up, and under normal circumstances that might mean rate hikes. But he expects the Fed, led by incoming Chair Kevin Warsh, to keep rates steady for the rest of the year.

Varghese's takeaway: that could give stocks a boost -- especially since strong profit growth is often just the flip side of inflation. “After all, one company’s margin expansion (and profit growth) is another person’s inflation."

(Terence Gabriel)

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