Structural inflation and Fed policy (with Romaine Bostick, Isabelle Lee)

The macro regime has shifted. Forget transitory. We face structural inflation from serial supply shocks (COVID, Ukraine, ME) and inflationary de-globalization (fragmentation, defense spending). The Fed is dangerously behind, with "extremely easy" financial conditions creating a stealth easing. Their asymmetric communication ignores the real risk of more hikes. Long-end yields and TIPS breakevens are just starting to price this new reality.

explicit

NDX

RUT

implicit

Metals

USD

Anderson Capital Management 7.8
Asset Manager
Fabio Natalucci 8.5

Structural inflation and Fed policy (with Romaine Bostick, Isabelle Lee)

yields

Long-end yields globally (5% US, 5.7% UK, 4% Japan) reflect inflation uncertainty and fiscal concerns.

8/28/2025 3:00:37 AM	short term cautious down	5 days later	-0.38%	+0.19%

Asks how the Fed can better account for persistent inflation and volatility in its communication.

Romaine Bostick
Fabio Natalucci

Structural forces like fragmentation, supply shocks (COVID, Ukraine, Middle East) are putting persistent upward pressure on inflation.

Markets will need to price in risks from reshaping supply chains and defense spending. The macro backdrop has shifted: inflation is coming up while real rates are easing (stealth easing).
Asks if current energy situation has parallels to past crises (Russian invasion, GFC).

Romaine Bostick
Fabio Natalucci

The Russian invasion of Ukraine is the closest parallel. This is the fourth supply shock in a row, risking entrenched inflation expectations.

Five-year TIPS breakevens are up 20-30 bps since the war began, a medium-term signal of concern.
Asks at what point temporary inflation becomes structural.

Isabelle Lee
Fabio Natalucci

Structural changes plus repeated supply shocks risk entrenching inflation expectations. The Fed needs a symmetric description of risks, including scenarios where rates may need to rise.

Financial conditions are extremely easy, not tight, despite the Fed's stance.
Asks what replaces globalization and if it will be more inflationary.

Isabelle Lee
Fabio Natalucci

Fragmentation along geopolitical lines replaces globalization. It comes with costs and inflationary pressures from redesigned supply chains, defense spending, and onshoring.

Long-end yields globally (5% US, 5.7% UK, 4% Japan) reflect inflation uncertainty and fiscal concerns. Higher inflation and rates are likely.

SignalTube

markets at a glance