IN THIS PUBLICATION:
- Inflation is currently the most discussed narrative in financial markets, and for a good reason.
- Economic indicators highlight inflation at a 30 year high.
- But the bond market and the dollar don't seem to be concerned about it.
Wild start of the week as you may have noticed, with markets registering some of the worst daily performances of the year, only to swiftly recover the losses in the following sessions.
We blame the new most hated word in the world, Delta, which has been spreading rapidly amongst younger demographics who are no longer willing to put off another summer of shenanigans (understandably so), because policymakers can’t come up with a better solution than “shut it all down”.
The positive headline, for now, is that vaccinations seem to be quite effective in reducing hospitalizations - Pfizer vaccine is 96% effective and, apparently, hospitalizations are mostly among unvaccinated people – meaning that the case for getting a shot (and virtue signaling it on Instagram) remains strong.
We’ll likely see a spike in contagions and restrictions, especially in Europe where the Euro 2020 and summer have led to massive gatherings of crowds (it came (R)home). Logically, the biggest question on our team's mind is, will they finally let Tim come back to Europe after almost a year of exile in the Americas?
Importantly, the spike in the Delta variant fears comes at a crucial time for the inflation conversation.