Financial markets started the week on a negative note with a concerted cross-asset sell-off yesterday. Equity markets plunged lower while the recent brutal sell-off in governments bonds continued. Inflation and growth concerns seem to have gripped markets as expectations for a 50-basis point rate hike from the Fed in May increase.
Today sees the latest US consumer price index data from March. Expectations are for a mammoth 8.4% print on a year/year basis. Bearing in mind the Fed’s mandate states that they aim for stable price rises around the 2% level. This relentless surge has pushed the level of price rises well above anything the Fed would deem acceptable. The question is whether the Fed can control inflation whilst not materially damaging the US economy. Many now believe they cannot.
Written by Viv Savani. 7:02am, April 12th 2022
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