Allison Nathan of Goldman Sachs Research dives into macro developments that are top of mind for investors, executives and policymakers.
Sharp upside inflation surprises that have pushed US inflation to 30+-year highs have fueled concerns that “temporary” pandemic-related inflationary pressures could prove persistent, raising the risk of a damaging wage-price spiral that could force the Fed into a costly tightening cycle. Where inflation goes from here—and what that means for the economy, monetary policy, interest rates and assets—is Top of Mind.
The Euro area's unprecedented program of fiscal risk sharing in response to the pandemic, and a new, likely less fiscally conservative ruling coalition in Germany, looks set to put the region on a path towards increased integration, higher growth, and better investor returns. But whether the current moment will go down as a seized—or (another) missed—opportunity for Euro area integration and growth is Top of Mind.