Scenario × Asset Analysis

What Happens to SOFR When Energy CPI Spikes?

What happens when energy CPI spikes 20%+ year-over-year? Consumer spending impact, inflation expectations, and recession risk from energy shocks.

SOFR

3.63%

as of Apr 13, 2026

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Trigger: CPI: Energy

314.02

Condition: rises above 20% year-over-year

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How SOFR Responds

When Energy CPI Spikes, SOFR typically responds to the changing macro environment. Secured Overnight Financing Rate, replacement for LIBOR, reflects overnight repo rates. This scenario is particularly relevant for yield curve & rates because changes in CPI: Energy directly influence the macro environment for SOFR. Investors should monitor both the trigger condition and SOFR's response to position accordingly.

Scenario Background

Energy CPI measures the price change of energy goods (gasoline, fuel oil) and services (electricity, natural gas) in the Consumer Price Index. Energy has historically been the most volatile CPI component, with YoY changes swinging between -30% and +50% in recent decades. A spike above 20% YoY typically signals either geopolitical oil shocks or sharp supply constraints.

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Historical Context

Energy CPI peaked at 41.6% YoY in June 2022 following the Ukraine invasion and OPEC production cuts. Other historical peaks: 49% in 1979-80, 33% in 1990 (Gulf War), 30% in 2008, and -20% in 2009 (demand destruction). The 2014-2016 oil collapse produced -20% energy CPI readings. Post-COVID reopening saw energy CPI swing from -20% (2020) to +41% (2022) within 24 months.