Investors ignore the wave coming from the inflation driven by the customs tariff, Deutsche Bank warns

Once all the new fees are in place – the latest is that all imports in the United States from India will undergo a 50 % tariff starting from today – it will be the average actual tariff action somewhere somewhere near 15 %. Estimates vary. Pantheon the total economy puts it up to 19 %. Before Trump, It was 2.4 %.

However, inflation currently works only by 2.7 %. Although it is heading up, its momentum is not great. Inflation is clear through his absence.

Wall Street’s analyst was confusing this for a while. Certainly, if the government imposes an increase in prices on a wide range of goods, then it should follow inflation?

Henry Allen of Deutsche Bank posted a research note yesterday on the pretext of it He is Below, the market reduces its impact. It refers to the relationship between the variable prices paid in the ISM service index. The scan is relatively narrow, and measures what the economy companies pay for services for goods. But the strange thing about the matter is that the index is moving in close connection to the consumer price index, except that the consumer price index is behind ISM services for a period of three months. The ISM scanning often predicts the place of inflation three months from now. Now it means that the number will be above 4 %:

“This paid component rose to 69.9 in July, which is the highest level since October 2022, and the return of the consumer price index is above 7 %, and the Federal Reserve was 75 -bit long for each meeting to reduce it again. Given the narrow connection between the two, we can see that a component driven by about 70 was often consistent with the amplification of CPI It exceeds 4 %, “Allen said in a note.

Consumers also believe that high inflation is coming. 0.5 percentage points from the Board of Inflation in the latest conference of inflation, which requires people to estimate where they believe that inflation will be 12 months from now, to 6.2 points.

In a note I saw luck, “The uncertainty surrounding the Trump administration’s changing tariff schedule was a major source of concern for respondents to the survey in August, where Stephanie Gweshard, senior economists, showed international conference indicators, with reference to the official edition:” consumers responded to the conditions of the Maragha.

Allen from Deutsche Bank argues that investors seem to ignore this data. It refers to the inflation bodies market, where investors are betting on future inflation rates. “The inflation bodies do not feel this at all,” he says, noting that the public swap has not moved much since early April, when Trump launched his trade war.

“This is especially amazing when you think that we know that the effect of the tariff is still liquidated. First, because it takes time until the customs tariff is transferred to the prices of consumer. Review it.

Here is a snapshot of the market before the opening bell in New York:

• S & P 500 futures contracts It was flat this morning before the mark, after the index closed by 0.41 % yesterday.
• Stoxx Europe 600 It was flat in early trading.
• FTSE 100 in the United Kingdom It increased by 0.11 % in early trading.
• Japan Nikki 225 It was 0.33 %.
• China CSI 300 It was a decrease of 1.49 %.
• South Korea Cuban It was 0.25 %.
• Elegant India 50 1.02 % decreased before the end of the session.
• Bitcoin It rose to 110.6 thousand dollars.

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