Free Trial
EGB OPTIONS

Bund put fly

FOREX

FX OPTION EXPIRY

OIL

Ecuador's Oil Production Drops 45%

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access

Mainly Bad News From China Lockdowns For US Inflation: BofA

US OUTLOOK/OPINION

BofA writes that the Chinese COVID lockdowns presents some good news but mainly bad news for US inflation and economic growth.

  • The main good news is that weaker Chinese demand has kept a lid on oil prices: BofA estimates by a little over 10%. Additionally, the US is not particularly dependent on Chinese consumer/business demand (accounting for less than 1% of Chinese GDP).
  • But there is plenty of bad news, mainly from supply-chain disruptions and the resulting inflation. BofA thinks it will take until at least the May CPI data for the full effect of China lockdowns - and they see a "short burst of upward pressure on goods prices.
  • That may not impact monetary policy though, with the Fed on autopilot w 50bp hikes in the next 2 meetings. By September (when BofA sees a downshift to a 25bp hiking pace), "any sustained impact of the China lockdowns on US inflation should be clear."

161 words

To read the full story

Why Subscribe to

MarketNews.com

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.

BofA writes that the Chinese COVID lockdowns presents some good news but mainly bad news for US inflation and economic growth.

  • The main good news is that weaker Chinese demand has kept a lid on oil prices: BofA estimates by a little over 10%. Additionally, the US is not particularly dependent on Chinese consumer/business demand (accounting for less than 1% of Chinese GDP).
  • But there is plenty of bad news, mainly from supply-chain disruptions and the resulting inflation. BofA thinks it will take until at least the May CPI data for the full effect of China lockdowns - and they see a "short burst of upward pressure on goods prices.
  • That may not impact monetary policy though, with the Fed on autopilot w 50bp hikes in the next 2 meetings. By September (when BofA sees a downshift to a 25bp hiking pace), "any sustained impact of the China lockdowns on US inflation should be clear."