There is a particular genre of financial argument where two smart people look at the same numbers and reach opposite conclusions, and both of them are technically right. That is roughly what happened Tuesday when author Nassim Nicholas Taleb took a swing at Treasury Secretary Scott Bessent's inflation victory lap.

The Oil Shock Hasn't Hit Core Inflation

Taleb replied on X to Bessent's Saturday post attacking Sen. Elizabeth Warren's "Trumpflation" tracker.

His argument, in short: borrowing costs are up 20%, the deficit is "exploding," and the oil shock "doesn't show YET" in core inflation, which excludes food and energy. Give it time, in other words.

He added that consumers are squeezed at the grocery store ahead of the winter season, and that today's globalized economy leaves countries more dependent on energy supplies than in 1973. That last point is the one that should make people sit up. The 1973 oil embargo is the reference case for energy-driven inflation, and Taleb is arguing the modern version could be worse, not better.

Energy costs also remain elevated amid the war in the Middle East, with Brent crude up 0.59% to $106.31 a barrel, while WTI futures were 0.63% higher at $94.73, at the time of writing.

Inflation Data in Focus

Over the weekend, Bessent called Warren a "Harvard Square inflationista" and her tracker "a statistical sleight of hand."

He shared a "Trump Affordability Tracker" that showed annualized core inflation of 2.5% under President Donald Trump versus 4.7% under former President Joe Biden, with grocery inflation at 2.1% versus 5.3% and cumulative real weekly wages up 1.5% versus a 3.9% decline.

Those are real numbers, and they tell a real story. But so do these: the Personal Consumption Expenditures (PCE) Index, the Federal Reserve's preferred inflation gauge, advanced 3.4% in August on an annualized basis, below the 3.7% consensus, according to the Bureau of Economic Analysis.

Core PCE, which excludes food and energy, rose 3.0% annually and 0.2% on the month, a full percentage point above the Fed's 2% target.

Economists expect September's consumer price index, due Wednesday, to show headline inflation of 3.6% and core inflation of 2.6%.

Yields and Deficit Add Pressure

The 10-year Treasury yield traded at 5.206% at the time of writing after touching a 24-year high of 5.36% last week, while the 30-year yield sits at 5.206%.

The Treasury Department's data showed the federal deficit so far this year at about $1.96 trillion, while the national debt stands at about $40.28 trillion.

That is the part of Taleb's argument that is hardest to wave away. You can debate whether grocery prices are up 2.1% or 5.3%, but the government is borrowing at a pace that requires someone to keep showing up to buy the debt, and lately the price of that debt has been going up.

Price Action: The iShares 7-10 Year Treasury Bond ETF (NASDAQ: IEF) has closed 0.12% higher on Tuesday at $89.54 and rose 0.13% in extended trading, while the iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT) closed up 0.41% to $78.37 and rose 0.05% in after hours, according to market data.

MarketDash Edge rankings show the iShares 7-10 Year Treasury Bond ETF has a Momentum score in the 28th percentile, with a negative price trend across the short, medium, and long term.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by MarketDash editors.