Inflation Expectations Are Now On The Verge Of A Major Breakout

Oh boy.

Inflation expectations are now on the verge of a major breakout. pic.twitter.com/NMzOsbg7aB

— Otavio (Tavi) Costa (@TaviCosta) October 5, 2021

‘Stagflation is here,’ following months of rising prices, BofA analysts say.

For months prices have been rising as the U.S. economy has recovered from the COVID pandemic while financial markets have stayed priced for perfection and central banks have clung to the view that elevated inflation would likely subside in short order.

Now, fears about higher prices are coming to the fore, with BofA Global Research analysts declaring in a Friday note that “stagflation is here” and a government report showing U.S. inflation still at a 30-year high as of August. Even central bankers appeared to be starting to capitulate this week, with Federal Reserve Chairman Jerome Powell saying that high inflation could run into 2022.

 

U.S. GAS CLIMBS TO HIGHEST CLOSE IN 12 YEARS ON SUPPLY CONCERNS

— FXHedge (@Fxhedgers) October 5, 2021

EUROPEAN ENERGY CRUNCH: Five EU countries, including France and Spain, issue joint statement on surging energyprices. They ask for probe into the gas market; and perplexing comment about how to set power prices, with reference to “average” rather than “marginal” production costs. pic.twitter.com/U62gPICV0d

— Javier Blas (@JavierBlas) October 5, 2021

Central Bank Hikes in 2021 (bps)…
Brazil: +425
Russia: +250
Ukraine: +250
Georgia: +200
Czech Rep: +125
Hungary: +105
Turkey: +100
Chile: +100
Peru: +75
Paraguay: +75
Mexico: +50
Iceland: +50
Pakistan: +25
South Korea: +25
Norway: +25
Colombia: +25
Romania: +25
New Zealand: +25

— Charlie Bilello (@charliebilello) October 6, 2021