Shine Trader Limited Reports:
In the European market on Thursday (November 11), benefiting from the surge in US Treasury yields and risk aversion, the US dollar index broke the 95 mark. Data released by the US on Wednesday showed that US consumer inflation rose to the highest level in more than 30 years. , The benchmark 10-year treasury bond yield closed at more than 1.5%. Nomura Holdings(4.4, -0.01, -0.23%) said that as energy prices soared to push the inflation rate of major economies to reach decades of highs, and caught central bankers by surprise, food prices may become the next source of pressure.
Nomura analysts such as Rob Subbaraman said in a research report: “Food is more weighted in CPI than energy, especially in emerging market economies. The seeds of the next crisis may have been planted in food prices.” They Added that high energy prices may have a strong secondary effect on food.
Rising energy costs, supply chain bottlenecks, and post-blockade demand have all contributed to the acceleration of global inflation. Last month, consumer prices in the United States recorded the fastest year-on-year increase since 1990, and inflation indicators in countries around the world have also soared. Nomura analysts said that even before the new crown epidemic, there were fundamental supply and demand factors that indicated that food prices have soared, and that the epidemic and rising energy costs have exacerbated this dynamic.
Under the assumption that global food prices will rise by 15% by the end of 2022, analysts believe that rising inflation expectations will push the central bank toward “earlier and faster policy tightening”.
Another potential impact will come from the “inelastic” nature of food consumption, which may reduce the actual disposable income that households can use for other goods and services. The latter will put downward pressure on inflation, requiring the central bank to measure the impact of opposing forces.
Reprint indicated source：Spark Global Limited information