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June 24, 2026
Partner, Chief Economist
The narrative in markets is changing from “lower oil prices mean lower inflation” to “lower oil prices mean more demand in an already overheating economy, which means higher inflation.”
This breakdown in the correlation between rates and oil prices can be seen in the chart below.
Driven by the strong April CPI, hot May non-farm payrolls and a hawkish Fed, the market narrative now suggests that the reopening of the Strait of Hormuz will further overheat the economy, forcing the Fed to raise interest rates soon.
Sources: US Department of Treasury, Macrobond, Apollo Chief Economist
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