Engineering and Construction Costs Keep Rising—But Is the Inflation Trade Already Dead?

If you’re still trading the old inflation playbook, you’re late. Engineering and construction costs are up again in June, but the market’s reaction is a collective shrug. The days when a hot inflation print would send commodities flying and trigger a Pavlovian bid in inflation hedges are over. The latest IHS Markit data, as cited by Seeking Alpha, shows that while costs are rising, the momentum is slowing. The materials and equipment indicator is still positive, but fewer respondents are reporting higher prices. In other words, the heat is off, but the oven is still on.

Let’s get granular. The construction sector has been the canary in the inflation coal mine since the post-pandemic supply chain chaos. In 2022, every uptick in steel or copper sent the inflationistas into a frenzy. Fast forward to June 2026, and the market is numb. DBC, the broad commodities ETF, is stuck at $28.55, flatlining for days. The inflation trade has lost its narrative power. Even as costs grind higher, the price action is dead. No one is chasing, no one is hedging. The algos have moved on to AI and tech IPOs. Inflation is now background noise.

The broader context matters. Global PMIs are mixed, with Europe and Asia showing signs of fatigue. The Bank of Japan is talking up rate hikes, but the yen can’t catch a bid. Australia’s inflation is sticky, but the RBA is on hold. The Fed is in a holding pattern, and the ECB is too busy talking about “transitory” again. In this macro soup, construction costs are a lagging indicator. The market knows it. That’s why DBC can’t catch a bid, even as the data prints hot.

Historically, rising construction costs would have triggered a rotation into commodities, value stocks, and inflation hedges. Not this time. The market is forward-looking, and the consensus is that the inflation impulse has peaked. The AI trade, the tech IPO pipeline, and the rotation out of growth are sucking up all the liquidity. Commodities are left in the dust, with DBC as the poster child for a trade that’s run its course.

But here’s the twist. The market’s apathy is itself a risk. If inflation re-accelerates, or if supply chains seize up again, the re-pricing could be violent. The market is not positioned for a new inflation shock. The consensus is crowded on the “disinflation” side. That’s a setup for a squeeze if the data turns.

Strykr Watch

Technically, DBC is in a coma. The ETF is pinned at $28.55, with no signs of life. The 50-day and 200-day moving averages are converging, signaling indecision. RSI is flat at 49, neither overbought nor oversold. Volume is anemic. The Strykr Watch are clear: support at $27.80, resistance at $29.20. A break above $29.20 could trigger a short squeeze, but the path of least resistance is sideways until proven otherwise. The Strykr Pulse is a tepid 44/100, neutral, with a bearish bias if support cracks. Threat Level 3/5. The risk is not in what’s happening, but in what could happen if the market is wrong.

The risks are obvious. If inflation re-accelerates, or if there’s a new supply shock, DBC could rip higher. But the bigger risk is a false sense of security. The market is not hedged for a new inflation wave. If the data flips, the scramble for exposure could be ugly. On the downside, if construction costs finally roll over, DBC could break support and drift lower as the inflation trade unwinds completely.

For traders, the opportunity is in the extremes. Long on a break above $29.20, with a tight stop at $28.50. Short on a break below $27.80, targeting $26.50. Until then, range trading is the only game in town. The real edge is in being early to the next inflation shock, or the final unwind.

Strykr Take

The inflation trade is dead, but the corpse is still twitching. Engineering and construction costs are rising, but no one cares. That’s the tell. The market has moved on, but the risk of a surprise is real. Don’t get lulled to sleep by the flatline. The next move will be violent, one way or the other. Stay nimble, keep stops tight, and don’t buy the narrative that inflation is yesterday’s problem. In this market, the only certainty is that consensus is always late.