Inflation Expectations Rising Among Businesses

Businesses (and they should know) see inflation rising going forward. Which supports the Fed’s current stance, and, all else equal, bodes poorly for bonds and utilities, and well for financials (read higher interest rates) going forward:

Atlanta Fed Business Inflation Expectations 

Released On 10/10/2018 10:00:00 AM For Oct, 2018
Prior Actual
Bus Infl Exp % Yr/Yr 2.2 % 2.3 %

Jerome Powell points strongly to the importance of inflation expectations as central to keeping actual inflation stable. And year-ahead inflation expectations at the business level are as strong as they have been this expansion, up 1 tenth in October to 2.3 percent and matching April this year as the highest for this series which goes back to 2011. The rate itself may still be subdued but the trend is clearly tilted higher. Yet the results do contrast with actual inflation as this morning’s report on producer prices was once again subdued. Watch for Friday’s consumer sentiment report which will include the latest update on inflation expectations at the consumer level which have also been tilting higher.


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