The UM consumer sentiment survey was just released. Their commentary included this chart, illustrating how the public perceives tariffs as primarily about inflation, in contrast to Wall Street, which views them as primarily affecting markets, jobs, and growth. ----- UM: Year-ahead inflation expectations surged from 5.0% last month to 6.5% this month, the highest reading since 1981 and marking four consecutive months of unusually large increases of 0.5 percentage points or more. This month’s rise was seen across all three political affiliations. As seen in the chart, inflation expectations evolved with major trade policy announcements this month. After the April 9 partial pause in tariff increases, inflation expectations ebbed but remained substantially elevated relative to March. Long-run inflation expectations climbed from 4.1% in March to 4.4% in April, reflecting a particularly large jump among independents. ----- This highlights the divergence between Main Street and Wall Street. Main Street believes tariffs are primarily about inflation and fears a price spike is imminent. If the Fed was responding to these fears, they would hold, or HIKE rates. Wall Street believes tariffs are primarily about markets, jobs, and economic growth. It fears both are heading lower. If the Fed were responding to these fears, it would CUT rates soon and hard. --- For now, the Fed is following Main Street's concerns about inflation by not cutting rates and providing little indication that a rate cut is forthcoming over the next few months. I think the Fed picked the correct side.