Supply disruptions and their economic duration are a major uncertainty for the U.S. economy and monetary policy. The risk of supply shocks worsening is considered especially relevant from June through September if no deal is reached, with oil inventories described as dwindling. Recent jobs data are cited as showing the labor market stabilizing, with unemployment low and stable. A 2026 high-end forecast for the 10-year yield is stated at 4.60%, alongside mortgage rates at 6.75%, requiring inflation to remain firm while labor conditions stabilize and improve. Market reaction is described as a rise in the 10-year yield and less confidence in 2026 rate cuts.
"While I am hopeful that the conflict is on a path toward a peaceful resolution, it is unclear how long these supply disruptions and their economic impact will last, and that has become one of the biggest questions for the U.S. economy and the path of monetary policy."
"My take, which has been the same since March 21, is that this conflict has taken too long, and the risk of supply shocks worsening is now in play. This will be especially true from June to September if we have no deal, as oil inventories are dwindling."
"Recent jobs data show that the labor market appears to be stabilizing and the unemployment rate is fairly low and stable. My 2026 high-end forecast for the 10-year yield was 4.60% with mortgage rates at 6.75%. For this to happen, inflation needed to remain firm while the labor market stabilized and improved."
"Markets responded with a jump in the 10-year yield from 4.53% to 4.58% and less confidence in 2026 rate cuts. This forecast to start the year had noth"
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