Apollo Warns U.S. Faces New Inflation Mountain

The U.S. may be staring at a replay of the 1970s inflation shock, according to Apollo Global Management. Chief economist Torsten Slok warned that price pressures are quietly stacking up again.

He pointed to tariffs, a weakening dollar and growing friction inside the Federal Reserve over how to balance inflation against slowing jobs growth. There is upside pressure on inflation and inflation expectations, Slok said, adding that the mix could create another inflation mountain in the months ahead.

That phrase is a throwback to the 1970s, when inflation ran into double digits and forced the Fed to slam the brakes with steep rate hikes triggering recessions and years of market turmoil. Apollo's note suggests investors shouldn't get too comfortable with today's cooler readings.

Markets, for now, are leaning on softer labor data as a sign the Fed could stay patient. But if inflation proves stickier than expected, the debate inside the central bank could spill over into investor sentiment quickly.The next set of inflation numbers will be a key test for that risk.