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A fiscal-interest rate feedback loop and core PCE at 3.3% are structural forces re-anchoring the 10-year Treasury yield near 4.5% and ending the era of cheap capital.
A structural inflation floor driven by tariffs and demographics leaves the Fed with a narrow policy window between reigniting price growth and cracking an overleveraged fiscal position.
U.S. producer prices rose 1.1% in May, lifting the 12-month wholesale inflation rate to 6.5%.