Macro Triangulation

📚 Methodology

We triangulate the true inflation trajectory using three distinct data layers:

• Smart Money (CME/Futures): We track implied Fed Rates from Futures markets. Drastic shifts here act as the earliest warning signal.
• Real Economy (Supply Chain): We monitor real-time pricing indicators (Manheim) and Producer Prices (PPI). Rising pressure here presages goods inflation.
• Expectations (Breakevens): We track the 5-Year Breakeven Rate (T5YIE). If this unanchors, the Fed will be forced to act.

Signal Taxonomy

• 🔥 HOT Setup (Bearish): Model > Consensus (+0.1%) confirmed by Rising Futures Rates.
• ❄️ COLD Setup (Bullish): Model < Consensus (−0.1%) confirmed by Falling Futures Rates.
• 😐 FLAT: No significant divergence across models. Pricing is efficient.

📚 Definitions

• CPI (Consumer Price Index): Measures the average change in prices paid by consumers for a basket of goods and services. The 'Headline' number.
• Core CPI: CPI excluding volatile food and energy prices. The Fed watches this closely as a better trend indicator.
• PCE (Personal Consumption Expenditures): The Fed's preferred inflation gauge. It adjusts for consumer behavior (substitution) unlike CPI.
• Core PCE: PCE excluding food and energy. This is the primary metric for the Fed's 2% target.
• PPI (Producer Price Index): Measures the average change in selling prices received by domestic producers. It tracks inflation at the wholesale level before it reaches consumers.

📎 Sources

• U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers [CPIAUCSL], retrieved from FRED, Federal Reserve Bank of St. Louis.
• Smart Money (Futures Proxy) data is derived from 30-Day Fed Funds Futures prices. Source: CME Group FedWatch Tool.