Thesis snapshot v2.1.1

Stagflation risk and Fed independence stress

ActiveInflation

confidence 0.82

April CPI on May 12 fired the energy-passthrough binary tell directly: headline 3.8% YoY (highest since May 2023), core 2.8% YoY. April PPI on May 13 ran hotter than CPI - headline +1.4% m/m / +6.0% YoY, core +1.0% m/m / +5.2% YoY (highest in three years). April import prices on May 14 added +1.9% m/m / +4.2% YoY (largest YoY since October 2022) with imported fuel +16.3% m/m. Friday May 15 delivered the sharpest single-session rate-path repricing of the cycle: oil +4.5% (WTI to $106, weekly +11%), the 10Y to 4.59% (up ~13bps in one day, fresh ~1-year high, biggest weekly yield jump since April 2025), and CME FedWatch hike-by-December odds to ~56% from ~36% Thursday and ~16% a week earlier - a 20pp single-day move. The bond-market rout was global, with longer-dated yields most affected and 30Y to the cusp of the 2023 peak. Powell exited chair Friday with conciliatory final remarks; Warsh now chair, first public statement still ahead. Calendar: April 29 FOMC minutes Wednesday May 20 2 PM ET, Walmart Q1 FY2027 Thursday May 21 pre-open, April PCE the formal invalidation indicator on May 28.

Held at 2.1.0 levels (0.82 ± 0.04). No new CPI / PPI / PCE / wage data in the 14.5-hour window. Beta(33, 7.2) parameterization continues to encode ~40 effective independent observations - the Bayesian frame makes the evidence weight explicit. April PCE on May 28 is the next primary move, then June 16-17 FOMC.

Invalidation

Structured machine-evaluable condition declared. See the snapshot view for the full condition tree.

Supporting evidence 12

Economic Data Evidence·StrongMay 12
April CPI headline came in at 3.8% YoY, the highest since May 2023. Core 2.8% YoY confirmed the energy-passthrough framing was material.
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Economic Data Evidence·StrongMay 13
April PPI ran hotter than CPI - headline +1.4% m/m / +6.0% YoY, core +1.0% m/m / +5.2% YoY (highest in three years).
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Economic Data Evidence·StrongMay 14
April import prices added +1.9% m/m / +4.2% YoY (largest YoY since October 2022) with imported fuel +16.3% m/m.
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Market Data Evidence·StrongMay 15
10-year Treasury yield closed Friday at 4.59%, up ~13bps in one day - fresh ~1-year high and biggest weekly yield jump since April 2025.
- MetricClose Price
- Value4.59
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Market Data Evidence·StrongMay 15
CME FedWatch hike-by-December odds moved to ~56% from ~36% Thursday and ~16% a week earlier - a 20pp single-day repricing.
- MetricRate Path Expectations
- Value0.56
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Market Data Evidence·ModerateMay 15
The Friday bond-market rout was global, with longer-dated yields most affected; 30-year US Treasury yields traded to the cusp of their 2023 peak.
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Policy Evidence·StrongMay 15
April 29 FOMC minutes scheduled for release Wednesday May 20 at 2 PM ET, detailing the historic 8-4 dissent debate.
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Policy Evidence·StrongMay 15
April PCE release scheduled for Thursday May 28 at 8:30 AM ET - the formal invalidation indicator for the stagflation thesis.
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Policy Evidence·StrongMay 15
Jerome Powell completed his Fed chair-term exit Friday May 15 2026, transferring chairmanship to Kevin Warsh. Powell retains his governor seat on the Board through 2028.
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Policy Evidence·StrongMay 13
Senate confirmed Kevin Warsh as Federal Reserve Chair 54-45 on Wednesday May 13 - the narrowest modern-era margin since the current approval process was put in place in 1977. Fetterman (D-PA) was the only Democratic crossover.
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Economic Data Evidence·StrongMay 14
April retail sales +0.5% m/m (third consecutive monthly increase), core +0.7% - the consumer is absorbing the energy passthrough notwithstanding the highest CPI in three years.
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Economic Data Evidence·StrongMay 10
University of Michigan May consumer sentiment preliminary at 48 - matching the all-time-low historical readings. 1-year inflation expectation at 4.5%.
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