Thread by @opinion

NEW: Will rising inflation wreak havoc on U.S. markets?

These 35 indicators from @johnauthers show how economic growth, policy and a pandemic are impacting the future of American money💵

Read The Big Take: trib.al/Em3NLWC

A year ago, Covid-19 crushed prices.

As expected, that has created inflation 12 months on as the economy reopens and rebounds. Now the market seems to believe that a resurgence of the pandemic will rein in inflation before it grows out of control megaphone.link/HSW4074133197

Either market players remain confident that the Federal Reserve can keep rising prices under control…

OR

They’re worried the economy won’t keep growing fast enough to push inflation numbers higher trib.al/Em3NLWC

Monday saw the worst day in global stock markets in some months, driven by:

📰Worrying headlines about Covid
🇨🇳China-U.S. tension

But the shift in bond markets is most important. Bond markets make the most direct judgments on inflation
bloomberg.com/opinion/articl…

Inflation is a complex phenomenon that grows from many places. Our dashboard aims to add clarity to the debate.

While the row of official inflation data is ugly, the highest in decades, and therefore colored in blue, the market indicators are shading gray trib.al/Em3NLWC

As far as the bond market is concerned, the inflationary picture is actually less worrying than it has been for most of the last 10 years.

That’s quite something, given what appears in the rest of the heat map trib.al/Em3NLWC

The thick blue stripe for business and consumer surveys shows that businesses are already convinced they are in the grip of cost inflation, while consumers are bracing for price increases ahead trib.al/Em3NLWC

If businesses and consumers are thinking this way, they are likely to act accordingly — which will drive higher inflation trib.al/Em3NLWC

Something must give. Whether the map ultimately darkens will depend on shifts in the commodity market and the labor market. And, of course, on the pandemic
trib.al/Em3NLWC

📌Bookmark our inflation heat map to get a more nuanced picture of how markets are positioned, what the official data say and what consumers and businesses are discounting trib.al/Em3NLWC