“The inflation genie is still out of the bottle.”Those are the words of strategists Claudio Piron and Athanasios Vamvakidis at BofA Securities, who said on Friday that inflation has yet to peak in most Group-of-10 countries and that “we are waiting for a proper market reality check.”
In an email to MarketWatch, Vamvakidis, the London-based global head of G10 FX strategy, said the “reality check” refers to “all markets” and the need for “a proper risk-off, as the economy weakens but inflation is high and sticky.” He notes that in most G-10 economies, core inflation, which excludes volatile food and energy prices, has yet to start falling.
Uncertainty over the most likely path of inflation and course of central-bank action has only increased this week. A steady stream of data out of the euro zone, Spain, France and the U.K. threw cold water on the idea of easing price pressures, while China’s manufacturing rebound looked better than expected. U.S.