Wage inflation is back with a bang, and so is speculation that the Fed will be forced to hike far longer than the market expects, which of course means much more pain for emerging markets.

Because just as EM currencies breathed a sigh of relief that the dollar may have finally peaked after 4 weeks of declines, the greenback surged following today’s average hourly earnings number, which as a reminder, was the strongest in 9 years…

… leading to a sharp spike in the dollar.

The stronger dollar has translated to immediate yield strength as well, with 10Y yields jumping 5bps as high as 2.93%…

… while 2Y notes rose to 2.686%, the highest since July 2008.

As for stocks, they are down, but nothing too dramatic just yet, with S&P futures down about 9 points and the Dow -90. 

As a reminder, it was the “hot” January hourly earnings print that according to many prompted the sharp selloff that Friday that cascaded into the VIXtermination event the following week. Is the market about to have another similar ugly reaction now that wage inflation, and the Phillips curve, appears to finally be making a comeback?