It’s finally time for the CPI and the market is nervous.

Gold and silver cracked today, breaking the war lows on fear that Trump doesn’t have the ‘imminent’ peace deal that he’s promised 37 times (according to CNN’s count).

Now it looks like the pendulum is swinging towards further escalation with Trump writing:

“Iran’s Military is a complete and total mess.
Much of it, like their Navy and Air Force, doesn’t even exist anymore –
They have been completely defeated. Iran is all talk and no action. The
Bully of the Middle East is DEAD!!! They’ve taken too long to negotiate a
deal that would have been great for them, now they will have to pay the
price!!! President DONALD J. TRUMP”

His message on Fox News was slightly different, saying that he is “getting close” to authorizing new strikes
against Iranian infrastructure, including power plants and bridges.

Notably Trump also highlighted that the drone that hit the Apache helicopter got “lodged between the two pilots.” He said the drone was on
fire but did not explode as the pilots brought the helicopter down into
the water. That shows how close this was to further escalation.

None of this is on a good trajectory and that’s why today’s markets look like this:

• S&P 500 futures down 0.9%
• WTI crude oil up $1.74 to $89.95
• USD/JPY up 13 pips to 160.49
• Gold down $121 to $4140

This all comes ahead of the CPI report at the bottom of the hour. The consensus is +4.2% and Giuseppe wrote about the distribution of forecasts.

Kevin Warsh won the nomination from Trump by putting together Team Transitory 2.0 along with Michelle Bowman, Chris Waller and soft support from 2-3 regional governors. A 4% print with no end in sight for the war is a problem.

Expect this line to be repeated from the White House’s Kevin Hassett, who said in December ““If inflation has gone from 2.5% to 4%, you can’t cut rates then…”

The gold market is throwing in the towel today, I suspect there will be others to follow: