WS #16409
US consumer sentiment has hit a five-month low while year-ahead inflation expectations have risen to 4.7%, creating a stagflationary backdrop. With the 10-year yield near 5%, JPMorgan is pricing in an 88% probability of a December rate hike. This environment is particularly damaging to consumer discretionary and financial assets, as higher rates suppress demand while simultaneously increasing borrowing costs for highly leveraged corporations.
Macro Inflation and Rate Hike Fears
US consumer sentiment has hit a five-month low while year-ahead inflation expectations have risen to 4.7%, creating a stagflationary backdrop. With the 10-year yield near 5%, JPMorgan is pricing in an 88% probability of a December rate hike. This environment is particularly damaging to consumer discretionary and financial assets, as higher rates suppress demand while simultaneously increasing borrowing costs for highly leveraged corporations.