Business & Investment

Global growth prospects are bleak just as the next major US inflation report is about to land

Traders and investors support Wednesday’s reading of consumer inflation, as optimism about the global recovery is fading, which could exceed expectations.

The risk is that the next round of inflation data will hurt market sentiment, Enhance the view The United States has shown that it is heading towards a stagflation-like environment after four consecutive months of strong year-over-year measurements of 5% or more, even if measurements that rose at some point declined. I am.

Until recently, many traders and investors have benefited central banks from the suspicion that inflation will eventually remain subdued once pandemic-related dynamics such as supply and labor shortages begin to subside. It’s starting to shift a bit, 5 year, 5 year futures rate Inflation swap trading at a level that has returned to highs earlier this year, suggesting that the Fed may lose control of inflation over the next five to ten years, according to TIP trader GangHu of WinShore Capital Partners in New York.

“Tomorrow’s inflation is important because if it continues to rise longer than most market participants expect, it will affect consumer spending and ultimately future growth,” he said. , US “The rise in real and nominal interest rates reflects part of that” permanently rising “story, but the market has not yet fully embraced it and the headline CPI is up. You may be surprised. ”

Economists’ estimates of the year-over-year headline consumer price index on Wednesday range from 5% to 5.5%, with a consensus of 5.3%. August Headline CPI Reading..That’s amazing Case report The proportion of labor and supply shortages only deteriorated in September, Average hourly wage Rising, rising energy prices and changing consumer expectations.

read: U.S. consumers expect record-high inflation over the next year, but gas prices are expected to fall

Forecasters are entering a period of very few, if any, economic models that can accurately assess where the United States is heading for inflation. On Tuesday, on the other hand, International Monetary Fund In 2021, we lowered our global growth forecast, and this year we lowered our growth forecast for the United States and other countries except the Eurozone, India and Russia.

Selection subject U.S. stock index It wobbled between profits and losses on Tuesday, reflecting some of inflationary concerns.30 Dow Jones Industrial Averages

S & P 500 decreased by about 0.2%

0.1% lower, Nasdaq Composite Index

Reduction of less than 0.1%.

Ben Emmons, managing director of global macro strategy at Medley Global Advisors in New York, said energy costs alone could add a few tenths of the consumer price index on Wednesday. He says record gasoline prices and shipping charges could push the CPI up to perhaps 5.6%. This is a level not seen since 2008.

“There is a lot of confusion about stagflation and people may be in some sort of denial,” Emmons said on the phone. “People are wary of over-emphasizing supply bottlenecks, because once the bottlenecks are resolved, it can be quite difficult. We are not there yet.”

look: How Equity Market Investors Can Understand Supply Chain Disturbances

Global growth prospects are bleak just as the next major US inflation report is about to land Global growth prospects are bleak just as the next major US inflation report is about to land

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