Investors are preparing for the release of a U.S. consumer-price index that may show no meaningful letup in inflation, leaving few safe places to hide just as systemic risks may be growing.Coming just a few days after Silicon Valley Bank’s woes overshadowed Friday’s robust jobs report, the February consumer-price index report on Tuesday will put the focus squarely back on inflation.
Inflation traders expect to see a 6% year-over-year headline CPI rate for February, following January’s 6.4% reading and December’s 6.5% level. Even the narrower reading that strips out volatile food and energy costs may be a problem. Researchers at Barclays said the core reading should come in around 0.4% on a monthly basis and 5.5% year over year — little changed since January’s data.
Many market participants are clinging to the hope of a less aggressive Fed rate hike on March 22 and policy path for the rest of the year. Meanwhile, the counterargument is being made that the central bank won’t be dissuaded by the sound of something breaking — a colloquial characterization of any damage done by the Fed’s full year of rate hikes.
According to Thomas Mathews, senior markets economist at Capital Economics, the Fed wants to avoid a repeat of the “stop-go” monetary-policy approach it took in the 1970s, when the central bank switch repeatedly switched between tightening and loosening financial conditions. Read: ‘Real wealth destruction’: This Deutsche Bank chart shows what could happen to assets in a repeat of the stagflationary 1970s.
BTC
BTC