Stagflation Regime: Fed Trapped, Yields Mispriced
The stagflation thesis—sticky inflation plus slowing growth—implies the Fed cannot cut without reigniting price pressures, yet markets are pricing dissent and hawkish pivots far too low. The contagion from CPI surprises into Fed decision markets is lagging badly, creating a chain of exploitable gaps. Conflicting directions within this theme reflect the asymmetry: some markets underprice hawkish outcomes while R8 (Dec cut) is moving toward taker, suggesting the cut probability itself is being squeezed out.