The market is still underpricing a tariff-driven inflation second wave
Investors are still treating tariffs like a temporary headline risk when the more important story is the interaction between sticky price pressure, higher yields, and a weakening consumer. That mix matters less for the next CPI decimal than for who leads the market in a higher-for-longer regime — and recent retail and pricing data suggest that repricing is not finished.
The market is still too relaxed about tariff inflation. Not because every tariff dollar will show up neatly in the next CPI print, but because the second-order effects are already lining up: input prices are hot, yields are sensitive to renewed inflation fears, and the consumer is showing strain just as companies start talking more openly about cost pressure. That is the setup for a higher-for-longer regime, and markets still look positioned as if tariffs are a one-off nuisance rather than a force that can reshape sector leadership. Monday’s ISM prices data matters for exactly that reason: it is a regime signal, not just a macro trivia point.
