The Federal Reserve has a problem. It’s been cutting rates to boost the economy, but guess what? Inflation isn’t cooperating. In fact, the latest data makes it painfully clear: those cuts may have been a mistake.

All three key inflation measures released this week were higher than expected. All of them. The core Personal Consumption Expenditures (PCE) index, the Fed’s go-to inflation gauge, ticked up to 2.8% in October from 2.7% in September. The overall PCE climbed to 2.3%, up from 2.1%. This isn’t a blip—it’s a trend. And trends like this spell trouble.

Let’s be blunt: the Fed probably cut too soon. Inflation isn’t “transitory,” it’s tenacious. And there’s a real risk it could flare up again, catching everyone off guard. The Fed’s rate cuts might have felt good in the short term, but they’ve also left the door wide open for prices to surge.

For markets, this is a recipe for chaos. Inflation on the rise means uncertainty, and we all know how investors react to uncertainty—they sell. Expect volatility in the stock market to spike. A sell-off isn’t just possible; it’s likely if inflation continues its relentless march.

Here’s the kicker: bonds are suddenly looking like the smart bet. While stocks face the looming specter of inflation-driven volatility, bonds are quietly offering attractive returns. If you’re looking for value in this environment, bonds are the place to be. The market may be skittish, but bonds offer stability—and returns that are finally worth considering.

And don’t expect the Fed to save the day anytime soon. In our view, there won’t be any rate cuts in December—or in the first half of next year. The data simply doesn’t justify it. The Fed knows it can’t keep slashing rates when inflation is knocking at the door. They’ll hold back, waiting to see how things unfold.

Then there’s the Trump factor. His economic agenda—think tax cuts, deregulation, and big spending—could supercharge growth. But here’s the catch: that kind of growth can also supercharge inflation. If Trump’s policies start fanning the flames, the Fed will have no choice but to stay cautious, keeping rates higher for longer.

Bottom line? Inflation is back in the spotlight, and it’s not going away. The Fed’s hands are tied, and markets will have to adjust. For investors, this is a wake-up call. The days of easy money and aggressive rate cuts are likely over. It’s time to rethink strategies, brace for volatility, and find value where it truly exists—like in bonds.

Make no mistake: inflation is a threat. And it’s one that neither the Fed nor the markets can afford to ignore.

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London-born Nigel Green is founder and CEO of deVere Group. Following in his father’s footstep, he entered the financial services industry as a young adult. After working in the sector for 15 years in London, he subsequently spent several years operating within the international space, before launching deVere in 2002 with a single office in Hong Kong. Today, deVere is one of the world’s largest independent financial advisory organizations, doing business in 100 countries and with more than $12bn under advisement. It specializes global financial solutions to international, local mass affluent, and high-net-worth clients. In early 2017, it was announced that deVere would launch its own private bank. In addition, deVere also confirmed it has received its own investment banking license.