Ten-year Treasury note yields are back over 3%, now at 3.04%. Most disconcerting is a renewed rise in energy prices, particularly natural gas, now at a 14-year high. Gasoline prices have fallen for 70 days, but crude oil has been bouncing higher in the last couple days, as have energy stocks. That's bad news for the stock market's bull narrative, which is partly reliant on keeping energy prices — a key proxy for inflation — moving to the downside. The economic data is supporting a slowdown, which is good news: New home sales in July were the lowest since January 2016. The PMI Services index was the lowest since June 2020. PMI Manufacturing was the lowest since August 2020. It's not just macroeconomic data that's soft either. Retail trends are also weakening. Macy's noted Tuesday that spending trends fell off in June, which was echoed by Nordstrom after the close: "While our quarterly results were consistent with our previous outlook, customer traffic and demand decelerated significantly beginning in late June, predominantly at Nordstrom Rack," the company said in a release. Nordstrom lowered its full-year earnings forecast by 27%. So why isn't the market down even more? Because a softening economy is what bulls, and the Fed, want to see. It's a sign the rate hikes are working. At the same time, jobs are still plentiful. In other words, investors should be celebrating. They are getting the slowdown the bulls wanted without an imminent economic collapse. Whether that slowdown accelerates into a full-blown recession is the key question for the fall. Fed Chairman Jerome Powell, in his Friday Jackson Hole address, will no doubt remind everyone that to defeat inflation the Fed will want to see the Fed funds rate (currently 2.25%-2.50%) above the inflation rate (Personal Consumption Expenditures, the preferred measure of inflation for the Fed, is currently at 6.8%. Coincidentally, the July reading is out at 8:30 a.m. ET Friday). Bottom line: It's a long road to victory over inflation, and Powell will no doubt remind everyone of that fact.