US Inflation Back Above 4% for First Time in Three Years - Will the Fed Hike Again?

The anchor of global asset prices - US rates - may need resetting. CPI rose 4.2% last month, a roughly three-year high, driven by energy costs from the de facto Hormuz blockade. The rate-cut narrative is dead; the debate is now whether the Fed must hike. For Taiwanese investors, a hawkish Fed means a stronger dollar and pressure on tech valuations and foreign flows. For yen watchers, a wider US-Japan rate gap suggests 160 may not be the floor, though safe-haven flows could cut the other way, amplifying volatility. The catch: this is energy-driven cost-push inflation, where hikes have limited cure and heavy side effects on a slowing job market. The 1970s taught the cost of hesitation. Practically, hold off on bottom-fishing long bonds until the Fed's dot plot clarifies, and watch for any Hormuz de-escalation - geopolitical relief could deflate this inflation scare as fast as it arrived.