July 17, 2026

With the Fed estimating the non-accelerating inflation rate of unemployment (NAIRU) at below 4.5%, and unemployment having stayed at or below that level for 57 months, tied for the longest such streak on record, the labor market has been operating in excess-demand territory for an unusually long time. That persistent tightness is a key reason inflation has remained elevated: when unemployment runs below NAIRU, wages and prices face sustained upward pressure. The chart below puts this streak in historical context. Prior episodes of sub-4.5% unemployment were typically far shorter. The current one is one of the longest on record, which helps explain why the ongoing inflation overshoot since 2021 has been so stubborn. The bottom line is that a strong economy is the reason why inflation has been high, and only by keeping rates higher for longer can the Fed cool inflation down towards the FOMC’s 2% inflation target.

July 16, 2026

The Epoch Capabilities Index combines scores from many different AI benchmarks into a single "general capability" scale, and the chart below shows that open-weight models trail the closed-weight frontier by around four months. For more, see also here.

July 15, 2026

The cover ratio measures how many dollars of investor orders a bond deal receives for every dollar of bonds issued. For hyperscalers, it has fallen from nearly 5x in February 2026 to below 2x in July, suggesting investors may need wider spreads to absorb additional hyperscaler supply, see chart below. For more discussion, see also here.