Markets Recast Lower Oil as Higher Inflation After Hot April CPI and May Payrolls
Updated
Updated · Apollo Global Management · Jun 24
Markets Recast Lower Oil as Higher Inflation After Hot April CPI and May Payrolls
3 articles · Updated · Apollo Global Management · Jun 24
Summary
Lower oil prices are no longer being read as disinflationary; investors increasingly see them as a demand boost that could add inflation in an already overheated U.S. economy.
April CPI, strong May non-farm payrolls and a hawkish Federal Reserve drove that shift, breaking the usual correlation in which falling oil prices tended to pull rate expectations lower.
The reopening of the Strait of Hormuz now feeds that view: cheaper energy is seen supporting activity rather than easing price pressure, raising expectations the Fed may need to lift rates soon.
That reversal marks a broader market regime change, with oil moves now interpreted through growth and demand strength as much as through direct fuel-price effects.