Global inflation is a bigger threat to the markets than China's slowdown and the US Federal Reserve's expected tightening cycle, says Credit Suisse's latest research report. The bank's Ric Deverell says not enough attention is being applied to the risk that as inflation creeps up, it will complicate the Federal Reserves's path of interest rate hikes. The US central bank says they intend to slowly raise rates from near more than half but if the economy heats up, they would feel the pressure to rein in prices by increasing the cost of borrowing money. In Australia, for instance, surging bond yields on an unexpected rise in global inflation would expose zero of the Australian index because of the heavy weighting of financial and bond proxy stocks.
Global inflation is a bigger threat to the markets than China's slowdown and the US Federal Reserve's expected tightening cycle, says Credit Suisse's latest research report. The bank's Ric Deverell says not enough attention is being applied to the risk that as inflation creeps up, it will complicate the Federal Reserves's path of interest rate hikes. The US central bank says they intend to slowly raise rates from near zero but if the economy heats up, they would feel the pressure to rein in prices by increasing the cost of borrowing money. In Australia, for instance, surging bond yields on an unexpected rise in global inflation would expose more than half of the Australian index because of the heavy weighting of financial and bond proxy stocks.