Daily Commentary

MarketMinder’s View: The news that eurozone consumer price index (CPI) inflation accelerated from 2.9% y/y in July to 3.3% last month has many penciling another rate hike at the September 10 ECB meeting. Look, we don’t think you can actually forecast central bankers’ actions based on any incoming data point. They are people and people aren’t a market function. They act on emotion, bias and interpretation that can all defy expectations. However, if the ECB does hike, we think it would be a mistake. This article pays it short shrift, but this was entirely about oil and there is no sign of inflation spilling elsewhere. Per Eurostat data, eurozone CPI excluding energy hit 2.2% y/y—matching July … and June … and down from August 2025’s 2.5%. Services inflation actually cooled to 3.0% y/y from 3.3%. The ECB cannot hike its way to more oil and gas production, and it has no tools that will specifically and solely affect demand for energy products. Hence, we think a hike is unnecessary and wrongheaded. But a hike or two isn’t automatically bearish. And the yield curve (the gap between long rates and short rates and a proxy for lending’s profitability) is sufficiently wide that even such small errors shouldn’t materially impair lending and economic activity.

MarketMinder’s View: Yes, yields are up lately and touching levels last seen before the unconventional monetary policy that depressed rates to artificial lows after 2008’s financial crisis—but those rates were the outlier. Not present rates, which are historically very normal and were seen commonly in the bull market from 2002 – 2007 and were higher in the 1990s, a booming period for stocks. Beyond that, though, some perspective is in order on the recent rise. Despite an ocean of headlines like this one and commentary giving the impression rates are spiking, here is the reality: US 3-month yields rose 0.06 percentage point (ppt) in August, 10-year yields rose less (0.03 ppt) and 30-year yields fell -0.01 ppt. Outside America, rates did rise a bit more in France, which saw the highest rise of the G7 and Australia, as 10-year French sovereign yields rose 0.18 ppt, matching the 30-year. German 10-year yields rose 0.12 ppt. UK yields were basically flat from 2-year maturities to 30-year. (All data from FactSet.) So when you see headlines touting the steep climb in long rates recently, consider that framing.

MarketMinder’s View: This is a very silly debate. Look, we get the historical tendency to use letters like L, V or W to depict economic growth’s trajectory during and shortly after recessions. Those make at least some sense from the perspective that they reflect how a graph of GDP or markets (or some other econometric) may look during and after the downturn (although we would note here that L-shaped recoveries have never occurred in a broad, diverse market or economy). But no, this is building on the recent, nonsensical “K-shaped” economy narrative that argues the wealthy are enjoying booming growth while everyone else slumps. Data never supported that (and don’t in the scant evidence provided here), as both high-, middle- and low-income households have seen consumption rise, just at different rates. Now Treasury Secretary Scott Bessent and others (reminder: we favor no politician nor any political party) want to say that is over and the economy is a C-shape, where low-income households are on the rise and high earners are cooling. Others say it is an E-shape, where spending is stratified. That seems most accurate but really isn’t telling you anything new. There have always been gaps in economic experience by income group or wealth category, and they will never fully converge. Some people, sadly, will always struggle and live paycheck-to-paycheck. We don’t think you need a letter to paint this picture. Lastly, none of this (or the included discussion of consumer sentiment) tells you anything useful about the current economic expansion or bull market. Wealth inequality trends aren’t cyclical indicators. They are sociology. Stocks don’t do sociology, so this shouldn’t factor into your investment decisions.