Market elation trumps brewing stagflation

By Jamie McGeever

Orlando, Florida (Reuters) – – Trade Day

The meaning of the forces running world markets

By Jamie McGeEver, Market Column

If anyone wants a firm photo, the US economy and policy makers are now on Friday about the recent consumer sentiments and expectations of the University of Michigan.

The results stand out. The expectations provided by the consumer are now the lowest since 1980, and the expectations of one year of inflation are the highest since 1981, over 6%.

Sendiment are only “soft” data, and there is a lot of debate whether they turn into “heavy” activity data such as retail and rent. The Fed Chair Jerome Powell said earlier this month that the connection between the two in recent years has been “weak”, and he has previously decreased the numbers of the expectations of U-Mich inflation.

But the direction of travel finds it difficult to ignore. Consumers derive President Donald Trump’s commercial war and fear tariffs will rise prices, forcing them to reduce costs. If these soft data filters fall into heavy data, the economy can be grabbing the “breakthrough” at the end of this year.

This questions the sudden optimism that was washed in the financial markets after the US-China tribe of the US-China. It is difficult to believe that it was less than a week, as the two largest economies in the world agreed to reduce mutual tariffs and discontinue in 90 days.

The speed with which economists have raised their growth forecasts on the detention, and the rally scale was quite remarkable in the financial markets, the loss of tariffs is still not dependent.

But the markets brushed it all aside and finished a remarkable week on a strong leg. S & P 500 and NASDAQ, respectively, have gathered their highest in two months, and NASDAQ is growing from April 7 to 30%.

Other markets have also moved a lot. The German DAX has hit the record high level and has increased by 30% since April 17, which has increased from the last 19 sessions, and this year the Safe-Haven Gold decreased by 4%.

The US and European earnings are approaching nearby, and although some large enterprises were widely positive due to the uncertainty of tariffs and prospects.

Therefore, the optimism of the recurring growth seemed to be partly with the perception of bond yields. Fed Rate Cut expectations and further Chinese stimuli forecasts were brought back in both countries and behind bonds behind it.