Inflation Remains a Problem for the Fed. Despite hopes that inflation may start to decelerate, both CPI and PPI ran hot yet again. However, it didn’t change rate hike forecasts much with one hike still on tap for 2026 and two more in 2027 expected by the market. Core CPI came in at 2.6% (above the forecast for 2.5%) and core PPI at a whopping 5%, reflecting the price pressures facing producers – a possible warning sign for ex-tech margins should these trends persist. Likewise, the Fed’s Beige Book highlighted the inflation problem with some noting fuel costs are driving “widespread margin compression.” Jobless and continuing claims reflected stable employment conditions.










