Chicago Fed President Austan Goolsbee cautioned that U.S. inflation has not only stalled on its path to the 2% target but has moved higher since the start of the U.S. military conflict with Iran, which he cited as a supply-side shock layered onto existing price pressures. Goolsbee, historically a more dovish voice, framing the situation with caution signals that even the Fed's less hawkish members are recalibrating expectations.
For Armada's traditional repo desk, a geopolitically driven inflation resurgence is a tail scenario that could push the FOMC toward additional hikes rather than cuts, driving SOFR higher and potentially inverting near-term repo economics for fixed-rate term agreements. Counterparties including hedge funds and asset managers may reduce duration in repo collateral, shifting demand toward overnight and short-term repo that Armada should be positioned to absorb.