Illustration: Sarah Grillo/Axios

A logjam of inflationary pressures is starting to hit the U.S. all at once, and will challenge the persistent low inflation that has been a hallmark of the economy for more than a decade.

What's happening: The biggest single inflationary catalyst is the trade war between the U.S. and China. Major companies, including Walmart and Macy's have already warned that tariffs will force them to raise prices.

Where it stands: UBS analyst Jay Sole said in a weekend note to clients that 25% tariffs on Chinese imports could accelerate pressure on companies' profit margins and put $40 billion of sales and 12,000 stores at risk.

  • And that's just one inflationary input.

What to watch: Oil prices hit a 3-week high Monday and look poised to rise further given the possibility of OPEC production cuts and U.S. sanctions on Venezuela and Iran.

  • Gas prices have managed to hold steady throughout much of the U.S. this year, but they now are facing a doubled-edged sword: the transition to more expensive summer gasoline blends and lower U.S. gasoline stocks, which are currently at a 7 million barrel deficit from 2018.

U.S. wages have picked up, particularly among low-wage workers as more municipalities and companies like Amazon and Target push through minimum-wage increases.

Perhaps most importantly, U.S. interest rates, which have remained low thanks to the Fed and market expectations for rates cuts, are facing "exploding US deficits and debt and foreign investors’ waning appetite for US debt," says Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.

  • Yields on the benchmark 10-year Treasury note have fallen to the lowest levels of the year but a spate of weak auctions recently — producing the lowest bid-to-cover ratios since the financial crisis — have analysts like Shalett looking for a reversal.

Yes, but: The country has faced many of these headwinds before. The big question now is whether these catalysts will lead to higher prices for consumers or if businesses will eat the increased costs, lowering profit margins and reducing revenue.

The bottom line: Data shows that near- and even medium-term inflation expectations remain low for the public and for Wall Street. The stock market continues to rise, backed by high profit margins and revenues. Something has to give.

Go deeper: Lack of U.S. inflation forces another look at long-held economic beliefs

Go deeper

Updated 16 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 10 a.m. ET: 10,902,347 — Total deaths: 521,940 — Total recoveries — 5,777,662Map.
  2. U.S.: Total confirmed cases as of 10 a.m. ET: 2,739,879 — Total deaths: 128,740 — Total recoveries: 781,970 — Total tested: 33,462,181Map.
  3. Public health: The states where face coverings are mandatory Regeneron stops trial after drug fails to help patientsWhat we know about the coronavirus immune response — Fauci says it has been a "very disturbing week" for the spread of the coronavirus in the U.S.
  4. Business: Top business leaders urge the White House to develop mandatory mask guidelines.
  5. Politics: Herman Cain hospitalized for COVID-19 after attending Trump Tulsa rally — Biden downplays jobs number, rebukes Trump for ignoring health crisis.
  6. Economy: The economy may recover just quickly enough to kill political interest in more stimulus.
  7. States: Texas mandates face masks in public spaces Florida reports more than 10,000 new coronavirus cases, and its most-infected county issues curfew.

Markets swell as the economy shrinks

Illustration: Eniola Odetunde/Axios

The economy is sputtering, but the markets are thriving — a highly unusual event that shows how the coronavirus has thrown all bets off.

Why it matters: The disconnect adds to the wealth gap. The richest 10% of households — who own 84% of stocks — are getting richer, while millions of out-of-work Americans cross their fingers that pandemic unemployment benefits will be extended.

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Fauci: Coronavirus surges mark a "very disturbing week" in the U.S.

Fauci testifies to the Senate Health, Education, Labor and Pensions Committee on June 30. Photo: Al Drago/AFP via Getty Images

NIAID director Anthony Fauci told medical journal JAMA on Thursday that it has been a "very disturbing week" for the spread of the novel coronavirus in the U.S.

What's happening: The number of coronavirus cases increased in the vast majority of states over the last week, and decreased in only two states plus the District of Columbia, Axios' Caitlin Owens reports.