Daily Macro US
CPI YoY Apr.
3.8%
+0.5pp
Core CPI YoY
2.8%
+0.2pp
Unemployment Apr.
4.3%
0pp
Fed rate
3.50-3.75%
Unchanged
Part-time work
4.9M
+445K
CPI MoM Apr.
+0.6%
-0.3pp
The US situation as of May 20, 2026 is characterized by the Iran war acting as a major exogenous shock: energy +17.9% YoY in April, CPI accelerating rapidly (2.8% → 3.3% → 3.8%). The Fed is trapped in a stagflationary dilemma, holding at 3.50-3.75% despite a record dissension (8 against 4). The labor market is holding (unemployment stable at 4.3%) but part-time employment rises to 4.9M. Some Polymarket markets have overreacted to the inflationary upside, while others underestimate recession risks.
Screening Table
| # | Market | Expiry | Market Price | Fair Value | Gap (pp) | Direction | Volume | Confidence |
|---|---|---|---|---|---|---|---|---|
| 1 | Inflation 2026 > 4.5% | Dec 2026 | 82% | 62% | -20pp | SELL YES | $992K | 7/10 |
| 2 | US Unemployment >= 6.0% | Dec 2026 | 18% | 4% | -14pp | SELL YES | $406K | 8/10 |
| 3 | Fed Rate < 3.0% before 2027 | Dec 2026 | 16% | 5% | -11pp | SELL YES | $1000K | 8/10 |
| 4 | US Unemployment >= 5.0% | Dec 2026 | 25% | 13% | -12pp | SELL YES | $406K | 6/10 |
| 5 | Inflation 2026 > 4% | Dec 2026 | 98% | 87% | -11pp | SELL YES | $992K | 5/10 |
| 6 | Annual GDP 2026 Negative | Q4 2026 | 9% | 12% | +3pp | BUY YES | $27K | 4/10 |
| 7 | CPI May YoY >= 4.3% | Jun 2026 | 38% | 30% | -8pp | SELL YES | $128K | 5/10 |
| 8 | CPI May MoM = 0.6% | Jun 2026 | 36% | 25% | -11pp | SELL YES | $20K | 4/10 |
| 9 | Fed Rate < 3.25% before 2027 | Dec 2026 | 28% | 22% | -6pp | SELL YES | $1000K | 5/10 |
| 10 | Eggs May: $2.00-$2.25 | Jun 2026 | 65% | 52% | -13pp | SELL YES | $15K | 4/10 |
Market vs Fundamentals
Market Price (red) vs Estimated Fair Value (green) — %
Top 5 Opportunities
1
Inflation 2026 > 4.5% — NO
↓ SELL YES-20pp
Market price
82%
Fair value
62%
Gap: -20pp
The market has linearly extrapolated the Iran shock without discounting mean reversion in energy. Core CPI is only 2.8% — inflation is concentrated in energy, not structural. PepsiCo, McDonald's, Wendy's are cutting prices: deflationary signals on the demand side.
▵ Bull case
- Iran war escalation — oil > $130/b
- Second-round inflationary effect on services
- Tariffs + weak dollar
- OPEC+ may cut production
▿ Bear case
- Oil partially pulling back from $126
- Core CPI only 2.8%
- Weakened demand (fast food chains cutting prices)
- Less favorable base effects in summer
2
US Unemployment >= 6.0% — NO
↓ SELL YES-14pp
Market price
18%
Fair value
4%
Gap: -14pp
To reach 6%, unemployment would need to rise +1.7pp from 4.3% in under 8 months — a speed comparable to 2008-2009. The SPF consensus caps at 4.5% max. No institution projects 6% except in extreme tail scenarios.
▵ Bull case
- Severe recession (tariffs + Iran)
- Systemic bank failure
- Credit collapse
- Mass layoffs in tech and manufacturing
▿ Bear case
- SPF: peak at 4.5% max
- Q1 2026 GDP positive
- Labor market solid (4.3% stable)
- Fed would cut rates before reaching 6%
3
Fed Rate < 3.0% before 2027 — NO
↓ SELL YES-11pp
Market price
16%
Fair value
5%
Gap: -11pp
CME FedWatch: 77% probability of zero cuts in 2026. To reach 3.0%, TWO cuts are required while inflation is accelerating at 3.8%. The FOMC dissension was leaning toward 'hold' or 'one cut' — not two.
▵ Bull case
- Declared recession → Fed cuts aggressively
- Unemployment surge
- Systemic risk
- Iran de-escalation → oil collapses
▿ Bear case
- CME FedWatch: 77% probability of 0 cuts
- Inflation 3.8% incompatible with cuts
- FOMC dissenters wanted to 'hold'
- Fed's anti-inflation bias
4
US Unemployment >= 5.0% — NO
↓ SELL YES-12pp
Market price
25%
Fair value
13%
Gap: -12pp
Same logic as the 6% threshold but less extreme. +0.7pp from 4.3% requires a mild recession. The SPF consensus doesn't go above 4.5% for 2026.
▵ Bull case
- Mild recession (5%+)
- Tech/retail layoffs
- Part-time employment 4.9M at risk
- DOGE budget cuts
▿ Bear case
- SPF: no forecast at 5%+
- Fed would cut before 5%
- Healthcare and transportation are hiring
- Stability at 4.3% for 3 consecutive months
5
Inflation 2026 > 4% — NO
↓ SELL YES-11pp
Market price
98%
Fair value
87%
Gap: -11pp
With CPI at 3.8%, 4% will almost certainly be reached. But if oil declines sharply, CPI could cap at 3.9%. Low probability (~13%) but the market leaves only 2% margin — thin liquidity on the NO side.
▵ Bull case
- Trend +0.5pp/month → 4% reached in May
- Energy durably elevated
- Sticky services
▿ Bear case
- Rapid Iran de-escalation → energy -20%
- Demand contraction
- Summer base effects