US CPI surprised to the downside, briefly lifting the Nasdaq as rate-hike odds
eased, but the move reflected cooling Fed expectations rather than an end to the
energy shock. If oil stays elevated, higher gasoline, transport and production
costs could push up forward inflation (secondary inflation risk) and may force
the Fed and other central banks to keep rates higher for longer, applying
material downward pressure on high-valuation assets via reduced forward
discounting. On Monday the S&P 500 energy sector rose about 3.2%, signaling
rapid fund flows back into high-cash-flow, defensive energy and value names.
