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JGB TECHS

(U1) Tilted Higher

AUSSIE 10-YEAR TECHS

(U1) Uptrend Weakening

US TSYS SUMMARY

Bullard Kickstarts Reflation Unwind Theme

AUDUSD TECHS

Fresh 2021 Lows

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  • Historically, equity returns tend to fall when inflationary pressures accelerate and CPI inflation rises above 4%.
  • This chart shows a scatter plot of the SP500 PE ratio and CPI inflation, using monthly data since 1960.
  • It is interesting to see that the PE ratio of US equities has never been that high (close to 30) for this level of inflation.
  • The last time we saw elevated inflation and a PE ratio close to 30 (before last month) was in August 2000.
  • Can the persistence of inflation generate a risk for US equities in the coming months?

Source: Bloomberg/MNI