Core CPI delivered another thrilling episode of “nothing to worry about”: +0.4% MoM and +2.8% YoY, conveniently landing just above forecasts and last month’s reading — because apparently inflation persistence is now considered a sign of economic resilience.
The real star of the performance was core services, the 76%-of-the-basket heavyweight that policymakers keep insisting is “normalizing.” Instead, it quietly accelerated to +2.48%, its highest level since last September. But don’t worry, we’re assured this is all perfectly manageable as long as nobody looks at the trend. Translation: inflation is behaving impeccably right before fertilizer shortages, energy spikes, and petrochemical supply-chain chaos arrive fashionably late to turn “soft landing” forecasts into collector’s items. Enjoy this brief moment of statistical serenity before the second inflation wave starts surfing straight through the consensus narrative.

In a nutshell, Wall Street keeps celebrating “transitory” inflation while food, energy, and core services quietly rehearse the opening act of Inflation Wave Two.

🤵 The Macro Butler Special Service 🤵

🌐 What begins in the oil market ends on your plate, as rising energy costs quietly turn into a full-blown squeeze on your wallet, your lifestyle, and ultimately, economic stability. 🌐

Read more here: https://themacrobutler.substack.com/p/from-fuel-to-food-the-bite-of-stagflation

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https://themacrobutler.substack.com/p/from-fuel-to-food-the-bite-of-stagflation-d54

As Wave Two of Trump-era stagflation officially lifted off, the Treasury’s $42B 10Y auction landed at 4.468% — the highest since January and the fourth straight tail — because apparently bond investors are no longer buying the “inflation is dead” cinematic universe.

The 10Y auction internals looked about as healthy as a gas-station sushi roll: bid-to-cover collapsed to 2.40, foreign demand hit its weakest since January, and dealers got stuck holding more paper as global buyers quietly backed away from funding America’s stagflation sequel.

Overall, the auction was a disaster dressed as “healthy demand,” confirming that in an increasingly weaponized world drifting toward Trump-stagflation, the asset once marketed as “risk-free” is quietly becoming one of the riskiest things you can hold in a portfolio.

After another hotter-than-expected “CPLie,” U.S. wholesale inflation surged to its fastest pace since 2022, as war-driven energy prices reminded economists that “disinflation” was apparently just a temporary hallucination. Producer prices jumped 6% YoY, core PPI hit its hottest level in over three years, and transportation costs soared as trucking and fuel expenses exploded higher. In other words: energy, freight, and supply chains are all getting more expensive again — but don’t worry, central bankers still assure us inflation expectations remain “well anchored.”

For equities, the real signal isn’t the comforting media narrative but the spread between core CPI and core PPI — a simple measure of whether companies can protect margins while costs explode underneath them. In April, that spread stayed negative for a sixth straight month and hit its weakest level since May 2022, signalling that input costs are once again rising faster than companies can pass them on. The last time this happened consistently, in 2021–2022, equity multiples compressed hard — despite Washington insisting the economy was “strong” right up until reality showed up with the invoice.

In a nutshell, war-driven inflation is back, corporate margins are getting squeezed again, and while Washington keeps selling “resilience,” markets are quietly replaying the 2022 stagflation horror sequel.

As Trump-era stagflation keeps unfolding in real time, the Treasury’s $25BN 30Y auction made history with a 5.046% yield — because apparently investors now require “inflation survival premiums” to lend money to Washington for three decades.

The Treasury just printed its first 30Y auction above 5% since August 2007 — yes, the same month the quant crash kicked off before the Global Financial Crisis arrived fashionably late. Apparently history doesn’t repeat, it just updates the coupon rate while quants quietly relive their trauma.

Demand at the 30Y auction looked about as convincing as a “soft landing” forecast: bid-to-cover fell to its weakest since November, while dealers were once again left absorbing more supply as investors demanded 5% yields just to pretend long-duration Treasuries are still “risk-free.”

Overall, it was another ugly tailing auction, reinforcing the growing realization that in a world of endless deficits, sticky inflation, and weaponized finance, the asset once marketed as “risk-free” may now be the most dangerous illusion in a diversified portfolio.

In a shocking development absolutely nobody who passed Economics 101 could have predicted, the IEA has discovered that shutting down major oil flows during a Middle East war may create… an oil shortage. The agency now expects global oil demand to outpace supply by 1.78 million bpd in 2026, with roughly 10.5 million bpd of Gulf production offline and the Strait of Hormuz closure hammering refinery operations, jet fuel production, and global supply chains. Apparently “energy transition” slogans do not magically replace missing barrels. The IEA also warned markets could remain severely undersupplied through Q3, even assuming the conflict ends soon, while refinery throughput collapses under infrastructure damage and feedstock shortages. Translation: higher oil prices, slower growth, demand destruction, and another inflation surprise are no longer risks — they’ve already RSVP’d.

https://iea.blob.core.windows.net/assets/2b89a47b-34a2-40e0-90ff-68f7ccd80715/-13MAY2026__OilMarketReport_publicversion.pdf

According to the IEA, global oil inventories are now projected to collapse by 8.5 million barrels per day in Q2 2026 as Middle Eastern production falls — proving once again that removing millions of barrels from global supply during a geopolitical crisis is apparently “bullish” for inflation after all.

The release of 400 million barrels from IEA reserves may buy markets a little time, but with supply deficits still looming, it increasingly looks less like a solution and more like using a garden hose to stop an oil-field fire.

US retail sales rose for a third straight month in April, once again proving that American consumers will keep spending until either confidence, savings, or credit cards physically collapse — whichever comes first. Headline retail sales climbed 0.5%, although nearly half the increase came from higher gasoline prices, meaning Americans mostly spent more just to drive to the store and pay more for groceries. Excluding gas stations, sales rose a far less exciting 0.3%, while vehicle sales slipped as consumers apparently discovered that $80,000 pickup trucks and 7% financing rates are not the bargain of the century.

Adjusted for “CPLie,” headline retail sales actually declined 0.35% MoM — another sign that Americans are increasingly spending more merely to maintain the same routines while ultimately buying less in real terms. Consumers continue driving to keep their jobs and paying more for essentials, but real purchasing power keeps deteriorating beneath the surface. Historically, this type of divergence between nominal spending and real consumption has often marked the early stages of broader stagflationary pressure — a parallel markets may ignore temporarily, but one long-term investors will recognize immediately.

In a nutshell, American consumers are still spending — just increasingly more money for less stuff — as shrinking real purchasing power quietly revives the early anatomy of stagflation.