Macro

The single most important thing in today's data: over the last three months, consumer prices rose at an 8.2% annualized pace, nearly double the 4.3% year-over-year figure everyone quotes. The yearly number is the rearview mirror; the 3-month rate shows the oil shock feeding into prices right now. Core inflation (which excludes food and energy) is still tame at 3.0%, so this is an energy story so far — but if the next monthly print confirms the momentum, the headline number climbs toward 5-6% and the pressure on the Fed flips from cutting rates to raising them. Meanwhile, the rest of the data took away the Fed's reasons to cut anyway: job growth re-accelerated hard, and markets are funding themselves like nothing is wrong. The contradictions are where the risk lives, and there are three big ones below.

• Jobs re-accelerated: monthly job growth jumped from ~79k to 188k (3-month average) in one quarter. A strong job market means the Fed has no reason to cut rates to rescue the economy — and more room to hike if inflation keeps running. This also contradicts the popular 'labor is cracking' narrative, at least for now.
• The 10-year REAL interest rate (the bond yield minus expected inflation — the true, after-inflation return on the safest asset) is at a decade high of 2.16%. At the same time, the S&P 500 sits near its decade-high valuation. Those two rarely coexist: when safe bonds pay this much in real terms, expensive stocks have competition. Historically, one of the two adjusts.
• Credit markets disagree with bank loan books. Junk-bond spreads (the extra yield lenders demand from risky companies — the market's fear gauge) actually FELL half a point over the past 3 months to near decade lows: bond investors see no trouble coming. Yet the share of commercial real estate loans going unpaid at banks is the highest in a decade. Public markets and bank books are telling opposite stories; the resolution of that disagreement is worth watching closely.
• The consumer is stretched thin: households save just 2.6% of income (the lowest of the decade), credit-card delinquencies are near decade highs, and consumer sentiment is the worst in ten years — yet spending on big-ticket items still grows +3.3% a year. That spending is being financed by draining savings and borrowing, which has a time limit. Directly relevant to any business selling large discretionary purchases.
• Housing is quietly correcting: home prices are up just 0.7% over the past year — which, with inflation above 4%, means prices are FALLING about 3.5% a year in real purchasing-power terms. Mortgage rates also re-rose 0.4 points in 3 months. Sellers don't feel it yet because the sticker number isn't dropping, but patient buyers are gaining ground every month.
• What to watch next: the June inflation report (confirms or kills the momentum story), junk-bond spreads crossing 3.25% (the classic early-recession tell), and job growth rolling back below +50k a month (which would revive rate cuts and flip this whole picture).