The Temptation to Call the End of Inflation
After the ghastly surprise of 2022, markets again are coalescing around a view that price rises will imminently come under control. That is clear if we look at implied inflation rates from the swaps market (available on the terminal), which suggest that CPI will be back below 3% by next summer:
Howell of Crossborder Capital: The US Federal Reserve looks to be leading the cycle once again. Having been the first to tighten starting from around this time last year, recent data suggest that the Fed’s QT cycle is close, or even already at, its nadir.
John Authers Bloomberg 12 december 2022
Traders are pricing in Fed rate cuts in second-half of 2023
Financial markets agree on the near-term vision, but see a rapid retreat from peak rates later next year. That clash could be because investors expect price pressures to ease faster than the Fed, which worries inflation will prove sticky after getting burned by a bad call it would be transitory.
It could also reflect bets that rising unemployment will become a more weighty Fed concern.
“People like to focus on things going back to where they were. But the trend” of higher rates “can last for quite a while,” said Kathryn Kaminski, chief research strategist and portfolio manager at AlphaSimplex Group. “That’s something people are underestimating.”
Bloomberg 11 December 2022
Varför många tror att nedgången på börsen är tillfällig
De tror att det skall fortsätta som förut.
Likely to be missing from discussions will be any mention of 2021
Consumed by this year’s challenges, we’ve all but forgotten the wild excesses that preceded them: the retail investor frenzy that drove up obscure stocks such as GameStop to extreme heights, how some $18tn of bonds were trading at one stage with negative yields, the rush to invest in blank-cheque Spac investment vehicles.
Remember dogecoin, a cryptocurrency designed as a joke that surged 15,000 per cent before crashing?
https://englundmacro.blogspot.com/2022/09/varfor-manga-tror-att-nedgangen-pa.html
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