Inflation persistence and consumer pressure (with Tim Stenovec, Emily Grafeo)

Yields cautious up , medium term, interviewee implicit

implicit

NDX

RUT

Oil cautious up , medium term, interviewee explicit

explicit

Metals

USD

EY-Parthenon 3.0
Management Consulting
Greg Daco 8.5

Inflation persistence and consumer pressure (with Tim Stenovec, Emily Grafeo)

wti

Potentially closer to 80, 75, 80 by the end of the year... you're going to see a risk premium of 10 to 15 dollars by the end of the year. He explicitly forecasts a year-end price of $75-80, which is below current ~$98, implying a downward move. However, he emphasizes a slow process and a persistent $10-15 risk premium, indicating the decline will be cautious and not a crash. The term 'cautious up' is interpreted here as 'cautiously moving up to a lower level from an even higher spike', but the directional intent is a moderated decline from current war-premium highs.

4/10/2026 11:41:57 PM	medium term cautious up	21 days later	+7.41%	+3.70%
4/9/2026 11:52:54 PM	medium term cautious down	20 days later	+8.80%	-4.40%
8/5/2025 6:58:39 PM	medium term up	20 days later	-1.71%	-1.71%

yields

Daco's core thesis is persistent inflation (core PCE at 3% year-end) and a Fed on hold, which implies yields are more likely to drift higher or remain elevated than to fall. He explicitly rules out near-term Fed cuts, supporting a 'cautious up' bias.

4/9/2026 11:52:54 PM	medium term cautious up	20 days later	+1.69%	+0.85%

Headline inflation surged the most since June 2022. Bond traders seem to price this as a temporary shock, implying the Fed won't have to act.

Tim Stenovec
Greg Daco

We are in a multi-dimensional framework with layers of supply shocks (tariffs, immigration, AI, Middle East). Inflationary pressures have been more persistent than anticipated. This shock will have a longer tail than a quick spike.
Greg Daco

Focus is on core PCE inflation ending the year at 3%, well above the Fed's 2% target. The Fed will be on hold, awaiting more data on the Middle East conflict.
Greg Daco

Most persistent price pressures are in goods segments from tariff pass-through. The energy shock will filter through to transportation, fertilizer, crop, and food prices, creating a layered shock and an income squeeze.
Greg Daco

The consumer is increasingly under pressure from a negative wealth shock and, most importantly, an income squeeze. Real disposable income grows at 1% while spending grows at 2.5%, financed by savings, credit, and wealth.

The oil price shock has already hit households by about $350, outweighing the average $290 tax refund benefit, disproportionately affecting lower-income families.
Greg Daco

The Fed will look at its mandates: inflation is moving away from 2%, employment is close to maximum. They will err on inflation being the greater downside risk, maintaining a marginally restrictive stance. The next move is no move for the foreseeable future.

We have a rate cut in December but for bad reasons, expecting a delicate labor market, not a balanced one.
Greg Daco

Job growth will hover around zero in coming months, reflecting a slower underlying pace of the economy.
Greg Daco

Oil prices won't go back to $60. Potentially closer to $75-80 by year-end. It will be a slow process; even with a ceasefire, a $10-15 risk premium will remain through year-end.

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