Inflation took a tiny nap. Then woke up cranky.
Mark Hamrick says inflation got a brief breather last month thanks to easing U.S.-Iran tensions. Cute. But now that those tensions are back in the July mix, the market’s cozy little “maybe rates stay put” narrative is looking shakier by the minute.
Why investors should care
When geopolitics starts messing with inflation expectations, the Fed gets handed a fresh headache. Higher inflation risk can keep borrowing costs elevated, and that’s bad news if you were hoping for a smooth slide into easier money.
The rate hike plot twist
The big takeaway here isn’t that a hike is guaranteed — it’s that the odds are back on the board for 2026.
- Cooler conflict helped inflation take a breather
- Renewed conflict risk can push prices back up
- That puts the Fed’s communication under a microscope, because everyone wants to know whether officials are still seeing the same movie you are
Big picture
Markets hate uncertainty almost as much as they hate higher-for-longer rates. And right now, inflation is getting a fresh excuse to be annoying.