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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
US
- In the past few week, rising inflationary pressures have led to many investors arguing that inflation is very likely to become permanent rather than transitory, as prices have already started to feed through wages.
- As a result, some practitioners have urged Fed policymakers to start raising rates before it is too late.
- At this stage, most economists are still expecting the Fed to let inflation run hot in the medium term, with US policymakers not starting a tightening cycle until the beginning of 2023.
- This chart shows an interesting relationship between the annual growth Employment Costs Index (ECI YoY - good proxy of US wage inflation) and US Fed Funds rate over time; a surge in wage inflation has generally been associated with a rise in the FFR.
- However, this time could be different; if we assume the ECI QoQ growth to be around 1% (as for Q1) for the last three quarters of the year, it could result in a significant divergence between the two times series.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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