The Fed is stuck between a rock and a hard place right now. With WTI crude oil prices jumping above $90 per barrel this week (Chart 1), we are going to see a sizable inflation shock over the next few months, at the very least. As a placeholder, we have raised our WTI oil price forecast by 15% to an average $69 in 2026, which raises our CPI inflation forecast to 2.7% y/y, up 0.3 percentage points from last week’s forecast. The increases in core CPI and core PCE inflation are lifted by a tenth to 2.6% and 2.8%, respectively, this year. A data-dependent Fed that has grown more concerned about another year of missed .
The future of CUSMA is the single most consequential macro uncertainty facing the Canadian economy this year. The agreement’s review process presents three potential pathways: (1) ratification, in which the three countries agree to extend the agreement for another 16 years; (2) non‑ratification, under which the agreement would remain in force but only until its scheduled expiry in 2036, subject to annual reviews; or (3) termination, whereby any country could withdraw with six months’ notice under Article 34.6. The last involves significant legal hurdles and political costs, making the possibility of the U.S.
For decades, Saudi Arabia has been one of the richest and most strategically protected nations in the world. Sitting on massive oil reserves, the kingdom isn’t just wealthy — it’s deeply connected to the global system that powers economies everywhere. 🛢️💰
A major pillar of its strength is energy. Through Saudi Aramco, Saudi Arabia remains one of the largest oil producers on Earth. Any disruption to its exports could send global prices soaring and shake major economies like China, India, and nations across Europe and North America. That alone makes stability in the kingdom a global priority.
Then there’s military capability. Saudi Arabia has invested billions in advanced defense systems, including the Patriot missile system supplied by allies like the United States. These systems provide a strong defensive shield designed to intercept missiles and aerial threats.
Diplomatically, the kingdom maintains relationships with multiple major powers — including the United States, China, and Russia — ensuring that many influential nations have a stake in its stability.
There is also a powerful religious dimension. Saudi Arabia is home to the holy cities of Mecca and Medina, making it the spiritual center for more than a billion Muslims. Any major conflict there would send shockwaves across the entire Islamic world.
Perhaps most importantly, Saudi Arabia has historically focused on protecting its energy infrastructure and maintaining regional stability rather than pursuing aggressive expansion.
⚖️ In the end, the kingdom’s real shield isn’t just weapons or wealth — it’s its global importance. 🌍🛡️