The macro narrative’s taking an unfavorable turn.

So said BofA’s Michael Hartnett in the latest installment of his popular weekly “Flow Show” series.

On the off chance you haven’t noticed, recent inflation outcomes across the world’s largest economy suggest the proverbial “last mile” down to 2% won’t be easy for the Fed, and that’s if they’re actually trying. Some believe they aren’t.

Both consumer and producer price growth overshot in the last two releases, and gauges of services sector inflation that strip out housing are running at a rate that’s nowhere close to consistent with policymakers’ goals.

Meanwhile, the last US jobs report was weaker than the headline beat suggested, and the same was true of the most recent update on job openings. Then, this week, investors were treated to a much weaker-than-expected read on retail sales.

Put all of that together and what do you get? Stagflation, unfortunately.

“The macro’s shifting from Q4/Q1 ‘Goldilocks’ to Q1/Q2 stagflation,” Hartnett said, pointing to stubborn US price growth and a labor market he described as “finally cracking.”

The figures speak for themselves. Inflation’s not on track to return to target. And the trajectory for the quit rate in the BLS’s JOLTS report lines up pretty well with hiring intentions from the NFIB survey. Hartnett also noted that full-time payrolls are down three million in three months.

“US in Q4 = 3% growth, 2% inflation = Goldilocks, but US in Q1 = <2% growth & 3-4% inflation = Stagflation,” Hartnett went on. That, he said, explains “why oil is now handily outperforming the Nasdaq YTD.”

He also offered an explanation for gold and Bitcoin at record highs. “US headline/core CPI is trending to 3.6-4.0% by June when the Fed’s expected to cut rates,” he wrote.

To Hartnett (and he’s not alone on this point) that suggests the Fed’s “implicitly tolerating higher inflation” in part because it “eases the US debt burden.” The weaker the Fed’s “policy credibility,” the weaker the currency should be.