NACHO, short for “Not A Chance Hormuz Opens,” reflects a market view that tensions in the Middle East are unlikely to ease anytime soon. Earlier this week, U.S. President Donald Trump again rejected Iran’s latest peace proposal, pushing oil futures higher.
The idea behind NACHO is not necessarily that oil prices must continue surging from here. It’s that markets are becoming less willing to price in a quick reversal lower.
It also means today’s CPI report could get much worse. The latest U.S. CPI report showed consumer prices rising 3.8% year over year in April 2026, up from 3.3% in March. Energy played a major role. Brent crude futures are currently above US$106 per barrel, feeding through into manufacturing, transport, and eventually consumer prices. U.S. food inflation rose 3.2% over the past year (dominated by increases in coffee and beef).
Coffee futures have already seen major volatility over the past year. Note here the divergence or a lag between what is happening in coffee futures markets and what consumers are paying at supermarkets or cafés.
Cattle is slightly different. Beef prices paid by consumers are moving more closely with tradable cattle markets. If energy prices remain elevated under the NACHO backdrop, cattle prices might be the more predictable tradable commodity.
Trading involves risk and may not be suitable for all investors. The information provided in this article is for educational purposes only and does not constitute financial advice. Always conduct thorough research and seek professional advice before making any investment decisions.
