Hi YXI friends,

Inflation is clearly resurgent, both across the energy-driven headline figure and the less volatile “Core” figure.

The market is now firmly pricing a hike for the Fed’s next move, even if Warsh takes over as the new Chair under Trump 2.0. The market will likely further test Warsh’ political bias later this year, as the economic data, at best, paints a “transitory” (sound familiar?) energy shock that allows the Fed to do nothing.

The timing of Trump’s visit to China is interesting. As China heavily relies on oil imports from the Middle East, the US-Iran war may have given Trump an upper hand in negotiations. It is therefore not in Trump’s best interest to soften a deal with Iran until the talks with China are over. I would not hold my breath over the Strait of Hormuz reopening this month.

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