Stock markets are seeing bigger fluctuations this year amid speculation over signs
of accelerating inflation, the pace of Federal Reserve rate increases and U.S. trade tensions with China.
But just as these financial elephants began trampling on one another in their rush to equities, we entered an era
of accelerating inflation and higher interest rates.
Sky - high interest rates and two recessions occurred before the Fed could finally break the back
of accelerating inflation.
I hope the Fed will not now invest its credibility in signaling further increases until and unless there is much clearer evidence
of accelerating inflation.
Not exact matches
The Fed is likely to
accelerate the pace
of interest rate hikes if
inflation starts to become «a problem,» says King Lip
of Baker Avenue Asset Management.
The Fed's announcement assuaged investors» concerns about the possibility
of accelerated interest - rate increases as rising materials costs for companies have signaled a pickup in
inflation.
Experts, however, had been anticipating
inflation to
accelerate at an even faster pace in March and, earlier this week, the Bank
of Canada raised its
inflation projections for 2018.
You lose confidence in the dollar and you want to get out
of the dollar, at which point you're like «okay you can pay me in dollars, but I'm going to buy land, fine art, gold, silver, that's when velocity
accelerates almost
of nowhere, and
inflation takes off.
«Now, even if
inflation does
accelerate over the remainder
of the year, there's still reason for the bank to be cautious on future rate hikes.»
U.S. data on Monday showed that consumer prices
accelerated in the year to March, with a measure
of underlying
inflation surging to near the Federal Reserve's 2 percent target as last year's weak readings dropped out
of the calculation.
U.S. consumer prices increased in January, with a gauge
of underlying
inflation posting its largest gain in 12 months, bolstering views that price pressures will
accelerate this year.
Minutes
of the Fed's March 20 - 21 policy meeting published this month showed officials expected the annual PCE price indexes to
accelerate in March partly because
of «the arithmetic effect
of the soft readings on
inflation in early 2017 dropping out
of the calculation.»
The U.S. economy probably added 185,000 jobs in March while wage gains
accelerated, a survey
of economists showed, reinforcing the Federal Reserve's case for continuing to increase interest rates gradually to keep
inflation from overheating while keeping unemployment low.
For one thing, further stimulus will continue to increase the amount
of money in the economy, which is not causing
inflation at the moment but could become inflationary when the economy does
accelerate.
He touted robust employment, low
inflation and
accelerating economic growth, and he said the Fed would continue its strategy
of gradually increasing its benchmark interest rate to keep
inflation in check.
According to my team's analysis
of data via Bloomberg, «good»
inflation can be viewed as price increases resulting from
accelerating economic activity and a strong labor market, and thus, most likely to further support rising wages and employment.
In other signs
of stabilization, China's exports rose for the first time in four months in June, while consumer
inflation accelerated.
He suggested this might add to
inflation risks;
accelerate the need for interest - rate hikes; strain mortgages; and ultimately widen the import - export trade deficit, which is the source
of trade tensions.
«With the Italian 10 - year bond yielding less than its US counterpart, with clear signs
of accelerating growth and
inflation in Europe, and a depressed Euro adding fuel to the fire, assets correlated to European rates will be vulnerable in 2017,» says Mitchell.
The Fed previously had signaled it plans to raise interest rates two more times this year, but some observers have expressed concerns that the tightening monetary policy would
accelerate over fears
of inflation.
But firms» attempts to raise their prices above other firms» prices results in ever -
accelerating inflation and eventual collapse
of money.
Minutes
of the Fed's March 20 - 21 policy meeting published on April 11 showed officials expected the annual PCE price indexes to
accelerate in March partly because
of «the arithmetic effect
of the soft readings on
inflation in early 2017 dropping out
of the calculation».
At the onset
of the Asian crisis, the Australian economy was growing at around trend rates, with domestic demand beginning to
accelerate, and underlying
inflation at 1.6 per cent.
If the Fed were to continue hiking rates based on the current low rate
of productivity growth for fear that
inflation would
accelerate, that would tend to keep productivity growth permanently depressed by preventing wage pressures from pushing businesses to investment in productivity boosting technologies.
However, core
inflation has
accelerated only slightly, suggesting little pass - through
of wage growth to price growth.
Our experts discuss the market perception vs. reality that
inflation is
accelerating, the supply
of US treasuries and the impact
of repatriation, and the demand for short term debt.
But analysts will watch the official statement after the meeting for signs
of rising concern about
inflation, and hints that the Fed might
accelerate its pace
of rate increases later this year.
Consumer prices, usually more stable than producer prices, have also
accelerated on a similar basis from a recorded
inflation rate
of less than 1.0 percent last summer to 2.4 percent over the 12 - months ended this past March, also a smart acceleration in a brief time.
Investors have begun to worry that the Fed might
accelerate the pace
of its credit tightening if
inflation, which has been dormant for years, starts to show signs
of accelerating.
And for all the muddle, the one thing that seems clear is that the risks to the economy and particularly the labor market — which is generating solid job growth and even some wage gains (for which we should all give Chair Yellen and the Fed serious credit)-- remain «asymmetric:» there's a greater risk
of needlessly slowing non-inflationary growth than there is
of inflation accelerating.
European stocks take cues from opening drop in U.S. and end near session lows Adidas backs yearly outlook European stocks on Thursday close lower, with selling
accelerating in the afternoon as U.S. stocks slumped at the start
of their regular trading session, extending a downturn begun following the Federal Reserve's Wednesday policy update on
inflation and economic health.
In his article «The Age
of Secular Stagnation,» Larry Summers argued that excess
of saving over investment is acting as a drag on demand to weigh on growth and
inflation, and current monetary stimulus should be expanded to
accelerate investments and pull demand forward, such as raising the
inflation target or to conduct nominal GDP targeting.
The emergence
of such «stagflation» in the late 1970s [13] led to general acceptance
of the natural - rate hypothesis, the idea that abnormally low unemployment causes
inflation to
accelerate.
The British Pound strengthened this morningafter the Bank
of England said
inflation may continue to
accelerate above its 2percent target, reducing the chances that the central bank will reignite asset purchases.
Another report earlier this week showed that the Fed's preferred measure
of inflation accelerated to its highest in more than a year in March, while data last week showed that wages grew at their fastest pace in in eleven years in the first quarter.
Of note on
inflation, «Strikingly, output price
inflation accelerated to the fastest rate since October 2008 amid sharper rises to input costs.
The idea is that there is some moderate, positive rate
of inflation that produces the lowest minimum unemployment rate that can be sustained without
accelerating inflation.
The Fed doesn't see any signs
of inflation accelerating, which would be good news for investors given the projections for a strong economic backdrop.
In addition, they dropped the statement indicating that they are «monitoring
inflation developments closely», hinting to an easing
of concerns about
inflation being too low and perhaps also suggesting that they do not expect
inflation to
accelerate significantly.
Investors also may face new uncertainties if
inflation unexpectedly
accelerates and raises questions about the pace
of Fed interest - rate hikes.
The Bank
of Japan expanded monetary stimulus on July 29 through a modest increase in purchases
of exchange - traded funds (ETF), yielding to pressure from the government and financial markets for bolder action to spur growth and
accelerate inflation towards its 2 percent target.
Several factors, including policy changes and peak - globalization trends, could potentially cause
inflation to
accelerate faster than many investors» subdued expectations based on recent decades
of disinflation.
RIG (Real Internal Growth)
accelerated to 2.6 percent and continued to be at the high end
of the food and beverage industry, while pricing was 0.2 percent, largely reflecting lower levels
of inflation in emerging markets.
Inflation theory posits that the entire mass
of the universe
accelerated to many times the speed
of light in a fraction
of a second and should have set the entire cosmos ringing with gravity waves.
Her group is pinning its hopes on a bill introduced by House
of Representatives Democrats called the
Accelerating Biomedical Research Act that would allow NIH's budget to gradually grow to the level it would have reached if it had risen with
inflation since 2003.
So far the Fed has minimized price
inflation, but how will you manage the removal
of accomodation from QE2, particularly if
inflation begins to
accelerate?
After exploring actual retiree spending patterns, Blanchett found spending grows at a rate lower than
inflation through most
of retirement, then
accelerates in later years because
of higher health - care costs.
Simultaneously, with
inflation likely to
accelerate modestly in the first quarter
of 2018, short - to medium - term
inflation breakevens offer compelling upside.
The Fed also made suggestions that
inflation is near target but that there is no need to
accelerate the pace
of rate hikes.
Two
of the key components
of core
inflation, medical costs and housing, are
accelerating.