Goodbye disinflation, hello oil risk premium

We now expect two more hikes from the Fed, and our commodity analysts see energy markets facing a convergence of supply chain disruptions. A higher expected path for oil prices means disinflation will be slower, and more restrictive policy also weighs on growth in 2027. Persistently higher oil prices likely mean second-round effects on inflation. We now expect core PCE inflation to end 2026 at 3.2% (4Q/4Q) and 2027 at 2.7%. Inflation weighs on purchasing power and rates add more pressure. Wealth supports the high end. We expect '27 real consumption at 1.8% (4Q/4Q) vs 2.1% before. The recovery in non-AI related business investment is delayed;