USTR enacted Section 301 forced-labor tariffs against 60 economies after the Supreme Court struck down the IEEPA tariffs and the Section 122 surcharge expired. The level of protection is roughly restored; the legal basis for it has changed for the third time in six months.
The stagflation regime is confirmed with high conviction as three of five major central banks explicitly cite supply-shock inflation alongside cut global growth forecasts.
Prices are being pushed up by shortages, not demand — and growth forecasts are being cut at the same time. Central banks can fight one or the other, not both.
3 sources on file · full trail at depth Evidence
Tariff legal fragility is a distinct and underpriced macro risk factor given the pattern of repeated judicial invalidation over the past six months.
Tariffs keep being struck down in court and re-imposed under a different statute. The level matters less than the fact that nobody can plan around it.
3 sources on file · full trail at depth Evidence
The resumption of Middle East hostilities keeps the Fast Cascade energy-shock pathway materially live despite risk asset pricing that suggests a durable de-escalation.
Markets are priced as if the energy risk has passed. The shipping and conflict data say it has not.
3 sources on file · full trail at depth Evidence
AI hyperscaler debt-financed capex represents an emerging financial fragility channel beneath continued equity strength that is not fully reflected in current valuations.
The AI buildout is increasingly funded with borrowing rather than cash flow. That converts an equity story into a credit story.
3 sources on file · full trail at depth Evidence
Major central bank policy paths have diverged materially this cycle, reducing global monetary policy coherence at a time when inflation pressure is broad-based.
The Fed, ECB and BOJ are pulling in different directions. That shows up first in currencies and funding costs.
3 sources on file · full trail at depth Evidence
The modal case is that this persists. The material point is the shape of the distribution around it: a 30% deflationary bust against a 15% combined weight on the two benign outcomes. Risk is not symmetric around the central case.
Cross-monitor flags
Four flags raised by sibling monitors this cycle — energy and trade, liquidity, sovereign debt, financial system stress. These are inputs to the weights above, not separate forecasts.
Source on file · www.piie.com
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| Asset class | US | Euro area | UK | Japan | China | Gulf / MENA | EM |
|---|---|---|---|---|---|---|---|
| Equities | -0.28 | -0.41 | -0.35 | -0.12 | -0.44 | -0.18 | -0.52 |
| Credit | -0.36 | -0.44 | -0.38 | -0.19 | -0.55 | -0.24 | -0.61 |
| Rates | -0.42 | -0.33 | -0.47 | -0.55 | -0.21 | -0.16 | -0.48 |
| FX | +0.11 | -0.29 | -0.34 | -0.46 | -0.31 | -0.08 | -0.57 |
| Commodities | +0.18 | +0.09 | +0.06 | +0.12 | -0.14 | +0.34 | -0.11 |
◇ Illustrative values. Directional stress only — no prices, weights or return expectations are implied by these cells.
Hold, 9–3 dissent
Easing biasHold, energy bias
Tightening biasNormalising
TighteningNot in this issue
UnreportedNot in this issue
UnreportedNext issue
Sunday 30 August, 08:00 UTC