How Inflation Surprise Is Changing Trade Deficit Math

The Fed's preferred inflation gauge hit 3.4% in May — the highest since October 2023. Lucas and Luna unpack how sticky inflation rewrites the trade deficit story: why a 0.2% uptick in core PCE forces the Fed to hold rates higher for longer, which keeps the dollar strong, which makes US exports pricier and imports cheaper. They walk through the April trade balance improvement of $704 million and explain why that nibble of good news is drowning in a sea of dollar headwinds. Plus: the Strait of Hormuz disruption is easing, but fragile shipping confidence could reignite supply-chain inflation. A tight, numbers-driven episode for anyone trying to connect the dots between Wednesday's CPI print and the trade gap. #TradeDeficit #Inflation #CorePCE #FederalReserve #StrongDollar #Exports #Imports #BalanceOfPayments #Economics #StraitOfHormuz #SupplyChain #MonetaryPolicy #DollarIndex #TradeBalance #FOMC #InterestRates #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo