Author Nassim Nicholas Taleb pushed back on Treasury Secretary Scott Bessent’s inflation claims on Tuesday, arguing that the oil shock, the deficit, and borrowing costs point to more pressure than the headline numbers show.
The Oil Shock Hasn’t Hit Core Inflation
Taleb replied on X to Bessent’s Saturday post attacking Sen. Elizabeth Warren’s “Trumpflation” tracker.
He said that borrowing costs are up 20%, the deficit is “exploding,” and the oil shock “doesn’t show YET” in core inflation, which excludes food and energy.
He added that consumers are squeezed at the grocery store ahead of the winter season, and that today’s globalized economy leaves countries more dependent on energy supplies than in 1973.
Energy costs also remain elevated amid the war in the Middle East, with Brent crude up 0.59% to $106.31 a barrel, while WTI futures were 0.63% higher at $94.73, at the time of writing.
Inflation Data in Focus
Over the weekend, Bessent called Warren a “Harvard Square inflationista” and her tracker “a statistical sleight of hand.”
He shared a “Trump Affordability Tracker” that showed annualized core inflation of 2.5% under President Donald Trump versus 4.7% under former President Joe Biden, with grocery inflation at 2.1% versus 5.3% and cumulative real weekly wages up 1.5% versus a 3.9% decline.
The Personal Consumption Expenditures (PCE) Index, the Federal Reserve’s preferred inflation gauge, advanced 3.4% in August on an annualized basis, below the 3.7% consensus, according to the Bureau of Economic Analysis.
Core PCE, which excludes food and energy, rose 3.0% annually and 0.2% on the month, a full percentage point above the Fed’s 2% target.
Economists expect September’s consumer price index, due Wednesday, to show headline inflation of 3.6% and core inflation of 2.6%.
Yields and Deficit Add Pressure
The 10-year Treasury yield traded at 5.206% at the time of writing after touching a 24-year high of 5.36% last week, while the 30-year yield sits at 5.206%.
The Treasury Department’s data showed the federal deficit so far this year at about $1.96 trillion, while the national debt stands at about $40.28 trillion.
Price Action: The iShares 7-10 Year Treasury Bond ETF (NASDAQ:IEF) has closed 0.12% higher on Tuesday at $89.54 and rose 0.13% in extended trading, while the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) closed up 0.41% to $78.37 and rose 0.05% in after hours, according to Benzinga Pro.
Benzinga Edge rankings show the iShares 7-10 Year Treasury Bond ETF has a Momentum score in the 28th percentile, with a negative price trend across the short, medium, and long term.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock/ Maxim Elramsisy
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