Scarcity inflation raises growth risk


• Supply shocks have created scarcity inflation, making higher inflation more persistent and increasing the risk of a growth slowdown. • Ten-year U.S. Treasury yields hit three-year highs after it became clear the Fed will start to reduce its balance sheet quickly. We see further yield rises ahead. • We… Read More »

What does inflation do to labour costs?


Limited impact due to National Labour contract Barclays macro team has written about how inflation affects wages in the Euro area (for example Euro area wages: Picking up (a little) dated 23-02-22, Euro Themes: Tracking the rebound of negotiated wages – Italy dated 19-01-22). Here we look at Italy only,… Read More »

Oil Prices and Growth: Is This Time Different?


Global growth expectations have dropped with the spike in oil prices, which have historically often been associated with surges in inflation, reductions in real income, and eventually recessions (Exhibit 1).     However, the relationship between oil prices and growth has changed for two major reasons. On the one hand,… Read More »

Impact of the drive for energy security


• We see the West’s drive for energy security slowing growth, increasing inflation and stoking demand for non-Russian fossil fuels to alleviate consumer pain. • Data last week showed U.S. inflation at 40-year highs and a robust labor market. We expect the Fed to deliver on this year’s projected rate… Read More »

Taking stock of the energy shock


A new shock to supply  We had already seen supply constraints driving high inflation over the past year, fundamentally changing how we  should think about the macro environment and market implications. The pandemic resulted in a huge switch in  consumer spending in the U.S., away from services and towards goods.… Read More »

Energy shock, Fed spur new outlook

BlackRock Investment Institute -

 We now prefer U.S. and Japanese equities over European stocks due to the energy shock. We stay underweight bonds because of the inflationary backdrop. Market backdrop: Bond yields sprinted higher last week, with U.S. 10 year Treasuries hitting near three year highs. Signs of weakening economic activity emerged in Europe.… Read More »

The Next Global Worst Nightmare Scenario


In today’s turbulent world, punctuated by destabilizing events of increasing intensity and frequency, it is vital to know what a worst-case scenario is and which factors are critical. What were considered low-probability events in the past must be countered today on an almost daily basis. However, in the context of… Read More »