Learn about the effects on the markets due to high inflation in the United States – sectors – the economy

The record level for the past four decades at which the variance in Americans’ cost of living, at 9.1 percent, Increasing analysts’ fears that at the next meeting of the US Central Bank (Federal Reserve), a new historical rise in its reference price will be chosen in the market to contain this rise in prices.which would increase the risk of this economy entering a recession and thus dragging other countries around the world down.

(Read also: This is how hyperinflation in the US will affect the Colombian economy)

Data revealed on Wednesday by the Bureau of Labor Statistics (BLS) for the aforementioned country indicates that the sixth month of the year inflation was pressured by higher gasoline and food prices.

The increase in energy prices was 7.5 percent in one month and contributed to nearly half of the monthly rise, and in the case of gasoline in particular, it became more expensive by 11.2 percent last month. The rise in food was 1 percent.

(You may also be interested in: “Taxes on mobile services will affect the poorest”: Asomóvil)

Under this scenario, Investors increased their bets that the Federal Reserve (Fed) could raise its benchmark market rates by 100 basis points at its July 26-27 meeting, Which makes it the largest modern-day modification of this central bank.

“I think they have time, if they want, to change the forecast to 100 (base points). I don’t think they gave us a good reason why they should slow down or slow down,” said Michael Feroli, chief US economist at JPMorgan Chase & Co., when asked by Bloomberg. graduating.”

“If we really get to 100 in July and 75 in September, I think the growth outlook later in the year is likely to deteriorate. At this point, I tend to think that the main effect might be to push further increases from the Fed.” .

After the central bank raised interest rates by 75 basis points, Federal Reserve Chairman Jerome Powell said last month, a 50-75 basis point hike is likely in July. Since then, most of his colleagues have echoed the message or supported a larger movement.

The inflation surprise is largely related to the rise in gasoline prices. But economists also noted that core inflation, i.e. items other than energy and food, was higher than expected.
“Inflation is entrenched and that’s exactly what worries most investors and central bankers,” Jeffrey Roach, of LBL Financial, explained to AFP.

The number is “ugly, no doubt,” Cliff Hodge of Cornerstone Wealth commented. “The Fed has no choice and should be more aggressive, which raises the possibility of a recession in 2023,” he said.

Markets react

The June inflation result for the world’s largest economy was slightly higher than expected by market analysts, so the market reacted swiftly.

The New York Stock Exchange, for example, ended the day in negative territory. The Dow Jones index lost 0.67 percent. The Nasdaq, which brings together major technology companies, fell 0.15 percent, and the Standard & Poor’s 500 Composite Index, of the largest 500 companies in the United States, fell 0.45 percent.

For their part, oil prices stabilized after the sharp drop on Tuesday, in the context of supply shortages. A barrel of Brent North Sea for September delivery rose 0.08 percent to settle at $99.57.

pause on the dollar

In the midst of this turmoil, the dollar globally took a breather and halted its upward pace.

“The dollar has fallen globally, against the world’s major currencies,” said Anders Langbek, director of economic studies at Grupo Bolívar.

In Colombia, this decline approached 1.5 percent, to 4558.05 pesos, which is the official rate on Thursday.

“Typically the markets anticipate the news and sell it as soon as the information is confirmed,” said Juan David Palin, an economist at Casa de Bolsa, who believes the currency was “overbought and a drop was expected at any time.”

Those who were consulted see that yesterday’s drop cannot be considered a breaking point for the currency, as it remains to be seen what happens to the global economy and oil prices in the midst of this situation.

said Philip Campos, Grupo Alianza Director of Economic Research.

the time
With information from agencies

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