Global | Monetary Policy & Inflation
Six Charts I Cannot Ignore
- By Bilal Hafeez
- 4 min read
It is easy to get caught up in short-term market gyrations and miss the big picture. After all, the VIX is historically elevated, and markets are seeing major swings every few days. Defying expectations, the S&P 500 recently recovered 8% from start-of-month lows, at one point moving 3pp in a single day. Alphabet alone saw a 2.7 standard-deviation jump last week, with Microsoft, Apple and Amazon hot on its heels. But a dead-cat bounce should not distract you from the broader macro picture.
And that picture is grim: inflation, rising interest rates, and recession risk. In the US, inflation is the highest since the early 1980s at 8.6% (Chart 1). In Germany, it is 7.9%, which exceeds 1970s levels (Chart 2). And in the broader euro area, the inflation rate has climbed steadily higher since midway through last year to sit at 8.1%. Core CPI for the bloc is at a record-high 3.8%.
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Solid article, reminder to follow the primary indicators and not to get caught in the recent bounce.