20 May 2018

Is an Inflation Black Swan Taking Flight?

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Right now markets don’t care about anything. They’re satisfied that all risks are contained and are pursuing the “trend is your friend” strategy that has dominated since the rise of Alan Greenspan. Everyone now expects only a gentle rise in US interest rates and wider risks only reinforce this assumption. As such, everyone is partying on one side of the ship, drunk and rowdy, as the seas remain calm.

Last week a few ripples appeared on the horizon in the form of restive US inflation. It appears to be a minor swell just now but the implications are enormous if it builds so is definitely worthy of a closer look.  If this swell does build, and the US Federal Reserve is forced to hike rate earlier than currently expected, about a year away, then markets will rush to the other side of the ship. The results are predictable.

Click herefor the full article from Macrobusiness.

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