"We Have an Inflation Problem:" AI CapEx, Yields Add to Fed's Rate Conundrum

"There's no way to interpret the prints other than 'we have an inflation problem,'" says Jeff Klingelhofer. He says the Fed needs to address the "demand-side shock" and be willing to have the economy to reach its 2% inflation goal. Jeff also expects a tentative consumer pullback if Treasury yields stay elevated. David Busch adds that softening labor market poses additional challenges to its dual mandate. He now sees a greater investor focus on AI CapEx and ROI companies expect it to bring for the long-term.

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