The Return of Structural Inflation?

Why the market underestimates the emergence of a structurally different inflation regime

Amid the relative calm, I have been having a rare feeling of unease and excitement as I think about Tuesday’s US inflation print. While markets might be locked in on the AI story and keeping an eye on news from the Middle East, inflation might suddenly become more relevant than usual.

What if AI’s acronym should really read “Accelerating Inflation”?

Markets have moved on from inflation. The narrative is settled: the wave is behind us, the grind back to 2% is a matter of patience, and the next interesting story is somewhere between AI capex and the next Fed cut.

I’m not so sure.

The more I look at the data ahead of Tuesday’s CPI print, the less it resembles a normal late-cycle disinflation and the more it looks like the early shape of a structurally different regime. Not a 1970s replay — history doesn’t repeat that neatly — but something with echoes. Energy that ratchets rather than mean-reverts. Tariffs that the market thinks are “done” while the Fed’s own research says full pass-through is still in progress. Shelter is doing all the disinflation work while everything else quietly plateaued. A price level that never came back to trend, and a market still positioning as if it will.

What follows is the framework I’m using to think about this, the charts that convinced me, and — for paid subscribers — how I’m translating it into portfolio positioning ahead of what may be a more important inflation print than the consensus believes.

Let’s dive straight in.