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Systemic Repricing
The poison is not in one pipe but in every pipeline, every price sheet, and every portfolio.
Despite the provisional US–Iran peace deal—and a drop in WTI crude oil—prices are now trending toward $150 per barrel following a failed peace deal. The pass-through shock is still working its way through supply chains, keeping gasoline at punishing levels near $5.50 per gallon (and $4.48 per gallon at the pump in some areas). Yet the inflationary fire has already spread far beyond gasoline.
Real-economy pressure
In manufacturing, surging steel, chemical, and logistics costs are crushing corporate margins while factory job losses extend to 31 straight months. The ISM Prices Index at 84.6 signals that raw materials—steel, copper, chemicals, and transportation—are skyrocketing, compressing industrial margins while employment contracts for the 31st straight month.
In services, the ISM Prices Index holds at 70.7, with diesel, oil, and logistics costs forcing restaurants, airlines, and construction firms to raise prices or absorb losses. Consumer services are bleeding as diesel approaches $7.00 per gallon, pushing restaurants, airlines, and retailers to hike prices.
In construction, input costs surged 2.2% in March alone, with diesel adding $0.60 per gallon to every load of lumber and steel.
Financial-market repricing
In financial markets, the carnage is equally revealing: real assets are cannibalizing paper assets.
The S&P 500 earnings yield (3.2%) has fallen below the 10-year Treasury yield (4.35%) for the first time since 2022, signaling that equities are now riskier than bonds in real terms. Investors are fleeing paper assets as gold rips toward $5,500/oz (and $4,770/oz in current prints) while the Dollar Index breaks below 95 (and 98), marking a flight from fiat credibility.
The bond market is pricing 50–75 basis points of Fed cuts by year-end—yet with core inflation at 4.0%, core PCE at 3.2%, and unit labor costs approaching 4%, any cut would reignite an uncontrollable wage–price spiral.
Conclusion
The Fed is trapped. Every asset class is repricing.
This is no longer a gasoline shock. This is a systemic repricing of American labor, industrial production, consumer capacity, materials, capital, and trust.