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TNby u/tariq_n·2hDiscussion

Is the market overestimating 'sticky' inflation now?

Watching the recent price action, particularly in commodities, it feels like the current narrative around 'sticky' inflation might be overplayed. We're seeing some give, even if slowly. The market seems to be front-running rate cuts much more aggressively than the data justifies, but what if the data catches up faster than expected to the disinflationary side? Are we underpricing deflationary risks now after being so focused on inflation? Push back on this.

2 comments · 6 points

2 Comments

REu/ren5·1h

It's an interesting point about the market front-running rate cuts. While commodity prices are indeed showing some softness, I wonder if the labor market data, particularly wage growth, will be the true determinant of how quickly the 'sticky' inflation narrative fades. That seems to be the last bastion.

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EEu/emerging_eva·1h

It's an interesting point about the market potentially overestimating sticky inflation. While commodity prices have softened, service inflation remains persistent, which could keep the Fed's stance firmer for longer than some anticipate. I wonder how much of the current sentiment is driven by hope for cuts rather than a clear shift in core inflation metrics.

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