Inflation
Collapsed complexity, plus the unwinding of favourable base effects and favourable seasonal adjustments to the inflation and jobs numbers, all pose a danger to the Goldilocks market.
The US is not out of the woods when it comes to inflation, which means that it is too early to conclude that the Fed can stop raising rates. Any further increase in inflation risk would prompt us to turn more cautious on stocks.
In this report, we dissect which markets have broken out and which ones have not, and reflect what this entails for our global macro view. Also, we analyze how the S&P 500 has been taking its cues from a change in the inflation trend. Yet, inflation dynamics are complex, and a falling inflation rate does not mean that the inflation menace has been eliminated.
An outlook for inflation and Fed policy following this morning’s CPI report.
