Trumpflation Returns: What Sticky Inflation Means for You

TL;DR: Headline inflation cooled to 3.4% in August from 4.2% in May, per the Motley Fool. August core CPI came in at 2.4%, while core PCE — a separate measure — held at 3.3% in June and July, per PrimeXBT. Tariffs and the Iran war's oil disruption are the two forces keeping prices elevated, and Treasury yields are already pricing in a harder Fed path.

What Actually Happened With Inflation This Year

Trailing 12-month inflation hit a three-year high of 4.2% in May, more than double the Fed's 2% target, according to the Motley Fool. August's reading cooled to 3.4%, with core CPI at 2.4%. That improvement is real. It also isn't the whole story: two policies are having a direct impact on consumer prices — tariffs and the Iran war, per the same reporting.

I have run zero-failure QA on systems where you don't get to explain away a bad number after the fact. A cooling headline print sitting on top of two live, unresolved shocks is not a resolved problem. It's a problem that hasn't shown up in the data yet.

Why Are Tariffs and the Iran War Still Driving Prices?

Tariffs are one leg of it. The Iran war is the other, and its mechanism is more direct: the conflict halted the daily movement of roughly 20 million barrels of petroleum liquids, according to PrimeXBT. Oil supply shocks move through an economy fast: fuel, freight, fertilizer, and finished-goods costs all reprice within a quarter.

Core PCE, which strips out food and energy, barely moved even as the headline number cooled. It slipped from 3.5% in May to 3.3% in June and July, per PrimeXBT. Read that stickiness for what it is: the underlying trend line hasn't turned. The volatile inputs just briefly weren't in the number.

What Are Rising Treasury Yields Telling Investors?

Bond markets don't wait for the Fed to admit a problem — they price it in early. Yields have kept climbing as investors weigh inflation still above the Fed's 2% goal, another bump in energy prices, and the debt load tied to the AI infrastructure buildout, according to CNBC. Modeling from RSM, cited by CNBC, found that even a 5.5% 10-year yield, up from around 5.15% at the time of reporting, would slow growth to 1.5% and push unemployment to 4.7%, while core inflation stayed near 2.4%. Higher rates that don't fix the inflation problem, paid for with slower growth and job losses: that's the trap.

Inflation has now run above the Fed's 2% target for 66 consecutive months, a stretch that historically takes a sustained rate-hiking cycle to unwind, per PrimeXBT. Equities haven't priced any of this in. The Dow, S&P 500, and Nasdaq have risen 19%, 29%, and 39% respectively since the start of the current term, through the Sept. 20 close, according to the Motley Fool.

Metric	Where it stood	Source
Headline TTM inflation, May peak	4.2% (three-year high)	Motley Fool
Headline TTM inflation, August	3.4%	Motley Fool
Core CPI, August	2.4%	Motley Fool
Core PCE, June–July	3.3% (down from 3.5% in May)	PrimeXBT
Months above Fed's 2% target	66 consecutive	PrimeXBT
10-year Treasury yield (reported)	~5.15%, climbing	CNBC
Dow / S&P 500 / Nasdaq, since term start	+19% / +29% / +39% (through Sept. 20)	Motley Fool

What Should You Do With Deployable Capital Right Now?

If you have cash from a liquidity event or a rollover sitting in the same public-market portfolio your advisor built for the last cycle, here's what you're actually holding: equities that have run hard on gains, untested by 5%-plus yields, over an inflation trend a cooling headline number is currently masking rather than solving. That's still Wall Street's menu, a public-market portfolio built for a cycle that may not hold.

This is exactly the environment where real, cash-flowing hard assets, private credit, royalty streams, real estate with contractual rent escalators, earn their keep, because their returns aren't purely a function of multiple expansion in public equities. I've written before about how private credit ETFs promise daily liquidity the underlying loans can't actually deliver under stress. I've also broken down the two evergreen fund structures Wall Street built. Institutions got the illiquid one. Retail got the redemption gate, and that matters if rate volatility triggers redemption requests industry-wide. If an energy shock is the thing keeping you up, oil and gas royalties are a real-asset way to sit on the other side of that trade.

Verify before you trust: none of this is a call to buy any specific instrument, and higher yields can crush overleveraged private structures as easily as public equities. Downside first, always. The point is to know which parts of your balance sheet are actually exposed before the bond market finishes pricing it in.

Common Mistakes

• Reading the headline CPI print and stopping there. Core PCE staying sticky while headline inflation cools is the more important number, it's the trend that's actually stubborn.
• Ignoring the bond market's own signal. Treasury yields are already repricing a harder Fed path. Waiting for an official rate decision to react means reacting last.
• Treating "liquid alternative" as a synonym for safe. A daily-liquidity wrapper around illiquid loans doesn't change what the underlying assets can sell for under stress.

FAQ

What does "Trumpflation" mean? It's shorthand for inflation tied to two policies, tariffs and the Iran war's energy-supply shock, that keeps prices elevated even as other data looks strong, according to the Motley Fool.

Is inflation actually improving? Headline inflation cooled to 3.4% in August from 4.2% in May, but core PCE barely moved, per PrimeXBT. The underlying trend hasn't turned.

Why do rising Treasury yields matter to a private-markets investor? Higher yields raise the bar a private deal must clear to be worth the illiquidity, and they raise borrowing costs for leveraged structures, per CNBC's reporting on RSM's modeling.

What should I actually do with this information? Don't trade on a headline. Find out which holdings, public or private, are rate-sensitive, and which are structured to hold up if yields keep climbing.

The Bottom Line

A cooler headline number and a stuck core number are two different facts. The trend that matters to your portfolio is the one that hasn't turned, and the bond market is already telling you that.

Want this kind of read on your desk every week before the headline settles? That's what the free AIN briefing is for, sign up below.

One Thing to Do Today

Pull your last statement and flag every position priced off long-duration growth assumptions or floating-rate leverage. That's the list to stress-test against a 5%-plus 10-year yield before the Fed makes the decision for you.

Educational content only. Not investment, tax, or legal advice. Not an offer or solicitation to buy or sell securities. Past performance does not guarantee future results. Private-market investments are illiquid and involve risk of loss, including total loss of capital. Consult qualified advisers. Angel Investors Network is not a broker-dealer or investment adviser.