Market indicators of future inflation levels hit their 10-year highs this month as investors digested corporate reports on how intertwined supply chains, stagnant demand and rising energy prices are affecting businesses. It has risen.
A 10-year “break-even” inflation rate derived from US inflation-protected government securities rose to 2.62% on Thursday, the highest level since September 2012, hitting the Federal Reserve’s long-term inflation target of 2%. It exceeds. The five-year break-even point rose to 2.86% on Thursday, the highest since March 2005.
Surging Energy cost As the economy recovers from the coronavirus pandemic, it has pushed higher inflation measures in recent weeks, exacerbating pressure from supply chain turmoil blocking companies trying to deliver goods.
Ian Ringen, an analyst at BMO Capital Markets, said:
This month, executives updated investors on the impact of rising prices in the third quarter on their business.
American Airlines management said in a statement Thursday morning that there was inflationary pressure on jet fuel prices and staff wages.
West Texas Intermediate, the US oil benchmark, 7 years this month. Energy costs are a major input to inflation indicators in most markets.
Subadorara Jappa, Head of US Interest Rate Strategy at Societe Generale, said:
Soaring fuel prices, along with log jams at ports, are impacting railroad operator Union Pacific margins, and the company expects shipments to grow at a slower rate than previously predicted. I warn you that there is.
Food maker Nestlé CEO Mark Schneider warned Wednesday that pressure from rising inflation had “not improved” since raising the issue in the company’s first-quarter earnings call in April. .. “Input costs are rising faster than we can roll forward through pricing,” he said.
The Federal Reserve has become more straightforward by not allowing inflation to get out of hand, and central banks are preparing to tighten monetary policy by tapering $ 120 billion in bond purchases a month. Authorities predict that interest rates may need to be raised early next year.
Nonetheless, some investors are becoming increasingly skeptical of the Fed’s commitment to combat rising inflation, especially for fear of putting a brake on economic recovery due to rising commodity prices. “It’s not this kind of inflation that the Fed has been willing to adjust and counter monetary policy,” Ringen said.
In a recent letter to investors seen by the Financial Times, hedge fund manager David Einhorn’s Greenlight Capital said FRB chairman Jay Powell “has not taken his finger off to fight inflation.” “Inflation is here and seems ready to get worse,” he added.
Yardstick of future US inflation climbs to highest in a decade Source link Yardstick of future US inflation climbs to highest in a decade
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