Euro-Zone inflation & unemployment rate creeps up
| The S&P 500 drags the Pound down.. |
| Yesterday, Germany, France & Spain all posted unexpected rises in inflation for February. It was inevitable then, that today the Euro-Zone was going to post the same (which it did). Recently, strong inflation hasn't resulted in a particularly stronger currency, mainly because it's obvious interest rates still have to be hiked. But another reason is possible stagflation.. Higher inflation leads to higher interest rates, that sees deteriorating consumer strength and stumbling economic growth. If a currency's performance is a reflection of an economy's performance, then higher inflation is not really a good thing. Stagflation is a condition where inflation is elevated, unemployment is rising and an economy is stalling. The latest inflation and jobs data is a real worry for the € and Euro-Zone.. Elsewhere, the S&P 500 is down 0.5% which has seen the Pound follow in its path (as it has been doing since the beginning of the pandemic). Hawkish comments from two Fed officials yesterday have suggested a more aggressive rate-hiking campaign is to come. This has forced yields to rise, stocks to fall and the USD to continue its recovery.. |
