Rising global inflation will have an impact on all markets

India, U.S. And as inflation figures continue to plummet around the world, so does the issue of epidemics. According to recent data, U.S. Consumer, U.S. The Consumer Price Index is at 4.5 per cent, which is higher than expected. It is safe to assume that it will return to normal over time. Unfortunately, the prices that have been kept as a resistance to market prices are also at a 20-year high. This is very worrying and even those who think inflation is temporary are panicking. It is certain that peak inflation will ease in the coming months.

Both the market and economists want to keep pace with rising projections even as inflation continues to rise. Most market participants expect the rate to rise at least five times in the federal 203.

Unemployment in the United States needs to rise by 200 basis points before a recession is needed to bring cyclical inflation down to 150-200 basis points. This would be a blow to the market, as unemployment in the US could rise sharply in a recession. If a recession strikes, business profits will be adversely affected and the market will fall further. In such a scenario, it would be important for any investor to determine how cyclical the current inflation rally is and how temporary it is due to covid.

One aspect of the Federal Reserve's tight monetary policy is debt. The last time the U.S. Inflation rose to 7.5 per cent. Then the federal debt / GDP was 3%, today that figure is more than 150%. The federal government has more than 60 trillion in debt. Even if the yield increases by 150 basis points, there will be an additional 60 billion in interest costs over time. The current U.S. tax base is about ૨ 3 trillion. Will he be able to increase his income by 20% in phases so that he can settle his debts without falling into debt trap? Record low interest rates have hidden many facts in consumer and corporate balance sheets. Many economists expect that if every 120 basis points increase, the U.S. The economy will stabilize.

Inflation is a real concern. There are two ideologies about this. One believes it is temporary and is at the top, while the other believes the Federal Reserve is too confident and needs to raise rates quickly and aggressively. The market could go down significantly if inflation rises. Most active investors have never seen consistently high inflation. However, markets do not expect inflation to remain high for more than 15 to 18 months. If these estimates turn out to be wrong and inflation continues to rise longer than expected, the situation could worsen. This may be the beginning of a system change. A system change will mean a new set of evaluations. This will have a profound effect not only on stocks and bonds but also on currency, gold and emerging market assets. Many problems can arise if, in fact, inflation is rampant.