U.S. inflation driven by President Trump's policies hit a three-year high of 4.2% in May, and while crude oil prices have since plunged, the effects are broadening beyond energy. The Federal Reserve Bank of Cleveland's Inflation Nowcasting tool projects Core Personal Consumption Expenditures, which excludes food and energy, will rise from 3.4% in May to 3.47% in July. The closure of the Strait of Hormuz disrupted not only oil but also fertilizer and other supply chains, pushing up costs for goods like plastics and tires. Half of the Federal Open Market Committee members expect one or more rate hikes before the end of 2026, with new Fed Chair Kevin Warsh seen as a historic monetary hawk. Higher borrowing costs could threaten the AI-driven stock market rally and pressure elevated valuations.