PPI Confirms What 30Y Already Knew

The producer price index printed 6% year-over-year against a 4.8% survey and a 4.0% prior. Core ex food and energy ran 5.2% versus 4.3% expected, up from 3.8%. Month-over-month headline at 1.4% on a 0.5% consensus — the biggest single beat on the print in three years. Energy costs are now visibly leaking through the producer chain. The Iran war as inflation transmission mechanism is no longer a forecast. It is a measured pass-through.

Treasuries are doing the work the headline writers should have done last week. The 30-year prints 5.03% on the screen, with the long bond cash quote sitting at 95-17 — the lowest visible price on the FIT block. The 10-year at 4.46% is up modestly intraday but the curve shape tells the cleaner story: yields are rising across the belly while the front end barely moves. WTI sits at $102.25, up $0.07 with the war premium intact. Bonds Fall as Traders Boost Fed-Hike Bets is the second Bloomberg TOP headline this morning. It is not a forecast. It is a positioning report.

Credit is still pretending none of this is happening. US IG OAS at 76 sits one basis point inside Tuesday's print, still pinned to the three-month floor. Global Aggregate at 27 has not moved. US Corporate at 76 is unchanged in OAS but down 0.29% in price as duration takes the loss. The dissonance is now a 30-bp gap between where the rates market sees risk and where the credit market is pricing it. Historically this gap closes one of two ways: rates retrace, or credit catches up. Rates have not retraced. They have re-accelerated.

Today's watch list narrows further from here. Initial jobless claims tomorrow at 8:30 — consensus 205K, prior 200K. Retail sales advance MoM at 0.5% consensus. Import price index landing alongside, with the headline reading 1.0% expected against a 0.8% prior. Each is a downstream tributary into the same question: how long can the Fed afford to hold rates steady against an inflation print this strong with energy still bid. Warsh has not yet taken the chair. The market is already pricing what his first FOMC has to acknowledge.

The bond market thesis from Tuesday's note has now been validated twice in 36 hours. Wednesday's Bloomberg Markets Daily headline reads "The Warsh Trade Runs Into Economic Reality." PPI is the print that turns the trade unwind into a confirmed regime. Watch the 30-year. The cleanest expression of the 2026 duration repricing is the long end refusing to rally on equity weakness. That is not noise. That is the bond market doing its job.

Educational and macro commentary only. Not investment advice. Views are my own and do not represent any employer or affiliated entity.