The Fed's preferred inflation gauge drops this morning at 8:30 ET.

Core PCE for April. Consensus sits at 2.6 percent year over year, the same as last month. Headline PCE expected at 2.3 percent. Markets are positioned for confirmation, not surprise.

Here's the setup. The last few weeks have been about whether tariff-driven price pressure is showing up in real data yet. CPI came in cooler than feared. Producer prices ticked higher. PCE is the tiebreaker, and the Fed cares about this print more than CPI.

Two scenarios matter.

A soft print (core under 2.5 percent). This would mark the peak of the inflation scare. Rate cut odds for September move higher. The dollar likely pulls back. Risk assets get room to breathe. Bonds rally.

A hot print (core above 2.7 percent). This is the bigger risk. Tariff pass-through finally showing in the data, services inflation sticky. September cut pricing gets pushed out, maybe to November or beyond. The dollar gets another leg up. TLT pressured. Equities and crypto under more strain.

The MCO view is clear on the regime. Dollar has confirmed a macro bottom. TLT sits at a critical decision point near 85. If today's print runs hot and TLT breaks support, we're not in a defensive rotation anymore, we're in tightening. That's a different game for everything risk.

Watch core month over month too. A reading of 0.3 percent or higher signals the underlying trend is reaccelerating. That's the number that actually moves the curve, not the headline.

One more thing. Personal income and spending data drops in the same release. If spending stays strong while inflation reaccelerates, the Fed has no cover to cut. That combination is the worst case for the rate cut bulls.

The print at 8:30. We watch the dollar and 10-year yields for the first read.