Investors are ignoring the coming wave of tariff-driven inflation, Deutsche Bank warns
One of the central puzzles within president Trump’s identification plan is, where is inflation?
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 since October 2022, when the CPI was still higher than 7 % and the Federal Reserve has long walking by 75 bits per second for each meeting to reduce it again. Given the narrow link between the two, we can see that the paid component in about 70 was consistent with the amplification of CPI that exceeds 4 %.”
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.
“The uncertainty surrounding the changing tariff schedule in the Trump administration was once again a major concern for the respondents in August, with the responses of Stephanie Gweshard, senior economists, in some indicators in the conference council note see by luck.
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.
2025-08-27 10:58:00
