September PPI numbers indicates that that yesterday's CPI was just the beginning of an inflationary trend.  The headline increased 1.3% more than doubling estimates in the largest jump since March of 2022.  Prices on goods doubled the headline number, while those for services came in at half its level, underscoring the characterization of frozen labor market that this service has long put forward.

In line with yesterday's CPI commentary, the chances of a Fed hike before the midterms had already moved to over 30%.  This service has always regarded PPI as more forward looking and thus important than CPI.  Election or not, the committee should delay in responding, and if it does that will only make matters worse.  Furthermore, this coincides what this service wrote when last referencing frozen markets:

market indexes should only be impacted when and if the K-shaped economy gets to the point where suffering expands to retail sales.

and that's exactly what appears to be happening.  Although this morning's simultaneous Retail Sales report exceeded headline forecasts, almost all of that is due to the gas prices referenced yesterday.  The total excluding gas stations figure barely rose at all, and discretionary spending like Sporting Goods declined.

Together with the spending data quoted from CrowdWisers as supported by equities, this morning's data screams that the gig is up, and it also jives with more recent reporting from our parent service:

On 10/13/26 7:43 PM, Esekla wrote:

Furthermore, I see that line of growth as being at least offset by the rising rates that I've labeled as dangerous for all GRoDT stocks.  Recent auctions and Fed jawboning have caused those moderate a bit, but I think the French budget generating fears of a new Eurozone debt crisis is the bigger factor.  Unlike that situation, where peripheral countries were forced to implement austerity measures in return for aid, the ECB's TPI is the only plausible backstop while French politics fail to produce a solution, which seems unlikely before the spring.

The macro data this week should be dominated inflation, with by CPI & PPI coming out on Wednesday and Thursday mornings.  Then things get quiet again for the week ahead of the Fed decision.

In the meantime, the main thing to write about is a potential crux in AI data center enthusiasm, as independent voices echo my own view on valuation metrics versus the gullibility of investors.  This seems to be pushing us closer to the fall apart scenario I mentioned two weeks ago, and even the leaders of the startups involved are planning for it, but I have little confidence in the election system or either of the political parties it is designed to perpetuate.  The main function of the midterms may simply be that their passing allows attention to turn from unintended consequences, to the more mundane, difficult, and important tasks of real world management and budgeting.  Then we'll see whether or not it's possible to continue to masquerade stagflation as growth.

To my mind, yesterday's auction of 10-year T-Notes was more of same was good and bad news.  The good was that demand was strong, which avoids immediate panic.  The bad is that they priced at 5.3% a full half percent above the pivot point I reiterated with the auction less than a month ago.  Something's got to give, and it's becoming clear that a major factor will be changing investment rules to cull returns from zombie capital.  This is yet another attempt to masquerade stagflation as growth, and it in no way eliminates the need for a functional Congress to make tax and budget changes.  When that eventually happens, self-directed investing should become more important than ever.  I will only update on today's 30-year auction if it changes this dynamic in some way.

All that remains now is to see what the government response is.