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Inflation worries continue to grip the markets today, after US consumer prices jumped much more sharply than expected in April amid supply shortages and rising demand as lockdowns ease.
Don’t Be Fooled by April’s Inflation Jump. It’s Being Driven by Reopening Quirks.https://t.co/3dVrRdZ38q
<– always worth digging into the data on levels and the attribution tables pic.twitter.com/6pzsVCVl7H
It’s dangerous to read too much into one number but the broad strength gives us confidence that this is not just a transitory story. Another buzz word for us has been how this year will be “complicated” for markets especially once reopening happens. This release personifies that thought process.
You may get dull periods but this year is going to be a big battle between the bullishness of mass reopening/stimulus on one hand and the inflationary consequences on the other. Expect regular pockets of vol. I still lean heavily on the inflationary camp but the reality is that the battle is still in the early stages and non-inflationists will still be able to use the transitory argument for several more months yet.
This is the best chart I’ve seen that clearly explains what’s going on with inflation.
Yes, April saw the fastest inflation since Sept. 2008
But that’s b/c prices were compared to last April.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP