In today’s briefing:
- The Risk of Transitory Disinflation
The Risk of Transitory Disinflation
- The main event last week for U.S. investors was the FOMC decision. As expected, the Fed raised rates by a quarter-point but Powell sounded like a dove in hawk’s clothing.
- The markets responded with a risk-on reaction. The combination of excitement over China’s re-opening and the dovish pivot by the Fed is sparking a risk-on rally.
- A successful China re-opening would translate into a surge in global demand and raise inflationary pressures, which could force the Fed to pivot to more rate hikes.
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