stagflation

According to Jinshi News, Seema Shah, Chief Global Strategist at Principal Asset Management, has warned that recent employment data is pushing the U.S. economy into the realm of stagflation. A cooling job market signals rising economic risks, but it also opens the door for interest rate cuts, especially in the context of oil price shocks complicating monetary easing expectations. She stated that the emergence of stagflation tendencies is a troubling development for the market.

According to the macro briefing released by Binance Research, a review of eight major energy supply disruptions from 1979 to 2019 shows that oil price trends exhibit a "two-phase" pattern: the first phase is the "hesitation period" (0-30 days), where market pricing reflects uncertainty rather than scarcity, with a historical average increase of only about 2%. However, on the fifth day of the current conflict, Brent crude oil has already risen by 9%, indicating that the market is pricing in tail risks in advance.The second phase is the "scarcity digestion period" (30-360 days), which begins when the 25-day inventory buffer of Gulf countries is exhausted, leading to forced production cuts. The historical average increase during this phase is 44%, with extreme cases reaching 110%-140%. The report notes that the daily oil flow through the Strait of Hormuz has dropped from a normal 16 million barrels to 4 million barrels, and Gulf countries have only 25 days of buffer left. When the tank utilization rate reaches the critical threshold of 85%, oil fields will be forced to shut down, and oil prices will enter an accelerated phase of the "scarcity digestion period." If oil prices remain between $85 and $95, a CPI increase of 30-40 basis points is manageable; if oil prices rise to $115-$130, CPI will increase by 110-150 basis points, potentially delaying Federal Reserve rate cuts until 2027; if oil prices exceed $180, CPI will rise by over 300 basis points, possibly triggering stagflation.Currently, Bitcoin maintains a correlation of over 0.9 with tech stocks. If oil prices remain above $110, a CPI rise to 3% and real interest rates exceeding 2.5% will trigger a sell-off in tech stocks, at which point the correlation between Bitcoin and U.S. stocks may break, triggering a shift in the "digital gold" narrative. Key indicators to watch include: vessel traffic through the Strait of Hormuz, inventory utilization rates in Gulf countries, CPI data on March 11, Federal Reserve guidance on March 18, whether the 10-year TIPS real interest rate exceeds 2.5%, whether the 30-day correlation between Bitcoin and the IGV index falls below 0.5, and whether ETF fund flows turn into net inflows.

"Fed's Mouthpiece" Nick Timiraos recently wrote that Federal Reserve officials have cut interest rates for the third consecutive meeting, but inflation and the labor market should be greater concerns. There are unusual divisions within the Federal Reserve, leading officials to suggest a low willingness to continue cutting rates.Recent public comments from Federal Reserve officials indicate a severe split within the committee, to the extent that the final decision may depend on how Fed Chair Powell wishes to proceed. Powell's term will end next May, meaning he will only preside over the next three interest rate-setting meetings. The persistent price pressures, coupled with a cooling labor market, present an unpleasant trade-off for the Federal Reserve, a situation not faced in decades.During the so-called "stagflation" period of the 1970s, the Federal Reserve's stop-and-go approach to similar dilemmas allowed high inflation to become entrenched. UBS Chief U.S. Economist Jonathan Pingle stated, "As rates approach neutral levels, each rate cut loses more support from participants, and you need data to motivate those participants to join the majority for a rate cut." (Jin Shi)

The U.S. monetary system is facing a new round of political shocks. The confrontation between Trump and the Federal Reserve has escalated from a war of words to a substantial power grab, as he attempts to dismiss Governor Cook and install economic advisor Milan into the FOMC, aiming to create a "super majority" that supports significant interest rate cuts. Several economists have pointed out through modeling that if monetary policy falls under political control, the U.S. will first experience a brief prosperity characterized by growth and low unemployment, followed by structural consequences of re-accelerating inflation, rising nominal interest rates, and declining economic growth, with the risk of stagflation from the 1970s re-emerging. Analysis also indicates that politicians' dominance over interest rate decisions is often closely tied to election cycles; while short-term stimulus can create superficial prosperity, the cost is uncontrollable inflation and subsequent deep adjustments. If Trump succeeds in reshaping the board before 2026, the independence of the Federal Reserve may be eroded, and the dollar's reserve status and long-term borrowing costs could be re-priced by the market.Bitunix analysts' perspective: From historical examples to current tactics, Trump's strategy clearly points to direct intervention in the interest rate path, and the consequences will not be short-term fluctuations, but rather a credit discount at the institutional level. If the Federal Reserve is forced to make significant dovish shifts before inflation is under control, the U.S. economy will enter a typical cycle of "prosperity first, then stagflation." For global capital, the real risk is not Trump himself, but the loss of the last line of defense in U.S. monetary policy.

ChainCatcher news, according to Jinshi reports, Minsheng Macro Research states that the Federal Reserve's interest rate cuts are the beginning of the problem, not the end. An increase in the magnitude of rate cuts may trigger inflation risks, while insufficient rate cuts could lead to political risks. The dot plot suggests a 75 basis point cut within the year, an increase of 25 basis points from June. In the future, factors such as a cooling labor market and sticky inflation will complicate the Federal Reserve's decision-making, and the market may price in more rate cuts.

ChainCatcher news, according to Jinshi reports, Federal Reserve official Goolsbee stated that a series of shocks are pushing the United States toward a stagflation situation.

According to ChainCatcher news, Zhitong Finance reported that Tianfeng Securities released a research report stating that Trump is considering new candidates for the Federal Reserve chair, raising concerns in the market about the "independence" of monetary policy. If Trump nominates a Federal Reserve chair with MAGA characteristics and close personal ties, it could have four impacts: increased risk of stagflation; heightened fiscal concerns; weakened dollar status and capital flight; and for the market, it could lead to a "triple kill" of U.S. stocks, bonds, and currency.

ChainCatcher news, according to Jinshi reports, Federal Reserve official Goolsbee stated that responding to stagflation shocks is very challenging, emphasizing the complexity of the current economic situation.

ChainCatcher news, according to a report from Jinshi Data citing a research report from China Merchants Macro, Powell still worries about the risk of stagflation, which means that as long as the inflation gap is higher than the employment gap, the Federal Reserve will find it difficult to cut interest rates.In June, the Federal Reserve provided a forward-looking judgment on the risk of stagflation, and in July, it continued this tone. Powell's concern about "inflation" is clearly higher than his concern about "stagnation." The most important statement is that "current inflation is above the target level, employment is at the target level, therefore policy should remain moderately restrictive." What Powell needs to confirm is that the tariff inflation shock is fully reflected.

ChainCatcher news, according to Jinshi Data, JPMorgan analysts stated in a mid-year outlook research report on Wednesday that U.S. tariff policies could weigh on global economic growth and reignite inflation in the U.S. The bank believes there is a 40% chance that the U.S. will fall into recession in the second half of this year. It forecasts a U.S. economic growth rate of 1.3% in 2025, down from an earlier prediction of 2%. "The stagflation effect brought about by tariff increases is the reason we have downgraded our GDP growth expectations for this year," the report said.JPMorgan is bearish on the dollar, citing a slowdown in U.S. economic growth, while policies supporting growth outside the U.S. will boost other currencies, including emerging market currencies. The bank expects the Federal Reserve to cut interest rates by 100 basis points between December and spring 2026. Analysts stated that if a recession occurs or the economic slowdown exceeds expectations, it would trigger a more aggressive rate-cutting cycle. However, the bank remains optimistic about the U.S. stock market, arguing that despite policy uncertainties, consumers and the economy still show resilience.

ChainCatcher news, Adam Posen, who has served at the Federal Reserve and the Bank of England, stated in a speech this week, "We may fall into a recession, or we may not, but in any case, we will face inflation." Posen, who currently serves as the president of the Peterson Institute for International Economics, has considerable influence and believes the probability of a recession is 65%.As for the Federal Reserve, Posen believes that given the still high levels of inflation, it has over-lowered interest rates. Once prices start to rise again, the Federal Reserve may not be able to keep up with the changes. As a result, the Federal Reserve may be forced to rapidly and significantly raise interest rates, putting additional pressure on the economy.If all of this comes to pass, Posen said, it may take years or longer to repair the damage.

ChainCatcher news, according to Jin10 data reports, China International Capital Corporation (CICC) stated that Trump announced "reciprocal tariffs" on April 2, exceeding market expectations. The reciprocal tariffs combine "carpet" tariffs with "one country, one tax rate," covering more than 60 major economies.Calculations show that if these tariffs are fully implemented, the effective tariff rate in the U.S. could rise significantly by 22.7 percentage points from 2.4% in 2024 to 25.1%, surpassing the tariff levels after the implementation of the Smoot-Hawley Tariff Act in 1930.CICC believes that reciprocal tariffs may increase uncertainty and market concerns, exacerbating the risk of "stagflation" in the U.S. Estimates indicate that tariffs could push U.S. PCE inflation up by 1.9 percentage points and reduce real GDP growth by 1.3 percentage points, although they may also bring in over $700 billion in fiscal revenue. In the face of "stagflation" risks, the Federal Reserve may have no choice but to wait and see, making it difficult to cut interest rates in the short term. This will further increase the risk of economic downturn and add downward pressure on the market.

ChainCatcher news, after the U.S. economy nearly approached a soft landing, the Federal Reserve now faces a series of more concerning situations. GSFM investment strategy advisor Stephen Miller stated that inflation is retreating; interest rates are declining; bond yields will decrease, all of which have led to a stock market boom.He added that the Federal Reserve's forecast has now shifted to a mild stagflation scenario, but there are still many areas where things could go wrong. Transitory inflation may persist, and there are reasons to believe that the risk of sustained inflation is currently high. As governments adopt protectionist measures, the regression of globalization in commodity markets has intensified price pressures, and the structural trend of U.S. inflation is moving in an unfavorable direction. Immigration restrictions and the exit of the baby boomer generation from the labor market will also exacerbate inflation. He added that the current probability of a recession in the U.S. is about 50%.

ChainCatcher news, according to Jinshi Data reports, U.S. President Trump has initiated actions to impose tariffs on Canada and Mexico. Moody's Chief Economist Mark Zandi believes that the U.S. economy may fall into stagflation.Recent data reflects that U.S. consumers and businesses are already worried about the economic outlook and are reducing spending. This effect will lead to a significant slowdown in the economy, while the impact of tariffs will cause high inflation, thus the U.S. economy may fall into stagflation. If true, this would be the first time the U.S. has experienced stagflation in 50 years.The Atlanta Fed's GDPNow model shows that the U.S. economy may contract by 2.8% in the first quarter. If true, this would be the first contraction since the first quarter of 2022. In the face of stagflation, the Federal Reserve may raise interest rates, similar to former Fed Chairman Volcker's aggressive rate hikes in the early 1980s, sacrificing the economy to curb inflation.

ChainCatcher news, according to a post by 1conformation on platform X, the company behind the NFT project Meebits, MeebCo, has completed a new round of financing of $3 million, with 1confirmation participating. Specific valuation information has not yet been disclosed.According to the information disclosed in the relevant announcement, Meebits has not issued tokens at this stage, but there are potential plans for token issuance in the future. 1confirmation added that although the project currently does not have a clear product direction, it will support the return of NFTs and build a long-term community.

ChainCatcher news reports that the U.S. market reacted enthusiastically to Trump's victory, but this trade has since eased.Economist Phil Suttle proposed another scenario. His outlook indicates that the more aggressively Trump implements policies such as deportation and tariffs, the greater the likelihood that the U.S. will fall into stagflation panic in the coming years. If immigration is cut off and workers are deported, the labor force may lose all growth momentum and even shrink.Suttle estimates that, combined with tariffs, economic growth could stagnate or even reverse in 2025 and 2026. Meanwhile, labor shortages and tariffs could drive up prices, potentially pushing inflation rates above 3% annually. Suttle believes that Trump's more radical policies could exacerbate these effects.

ChainCatcher news, European Central Bank board member Patsalides warned that if U.S. President Donald Trump follows through on his threatened trade tariffs, the European economy could ultimately fall into stagflation. The Central Bank of Cyprus governor stated in Nicosia on Thursday, "Trade tensions are escalating, and if trade restrictions become a reality, the result could be inflation, economic recession, or worse, stagflation."He noted that while there is room to continue lowering borrowing costs, it should be done "at a steady pace and magnitude."