Goldman Says Inflation Will Continue to Accelerate

Investors are looking for the next big contrarian trade after the widely expected first Fed rate hike in nearly a decade on Wednesday. A prominent Wall Street strategist believes she found it.

Goldman Sach senior rates strategist Silvia Ardagna told clients last week the market is mispricing the potential of rising inflation:

“As unemployment continues to fall and excess slack gets absorbed, we expect that US core and services inflation, which are already contributing about 2 percent to headline inflation, will continue to accelerate gradually but faster than the market expects.”

Ardagna noted how the futures market is pricing inflation to average 1.25 percent over the next five years, which she says is too low as stronger wage growth and easier energy price comparables will make 2016 more reflationary.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza