What went up....

Rough landing?

Last month, we noted that the reported pick up in inflation driven by increased US air passenger numbers might not be a sustainable metric, even though at a first glance, you could still be forgiven for thinking that the recovery story looks promising:

However, if we keep looking more closely, a different story continues to emerge:

We seem to have ‘levelled off’ at around 3/4 of previous demand:

On that basis, the latest inflation data came as no surprise - we continue to see a weak growth and inflation environment - not only longer term (per 30 year breakeven inflation expectations and longer term proxies), which are also now looking as though they might be rolling over in the short term too). As we said last month-

It could all change but so far there is no reason to expect that inflation fears reflect anything other than a supply shock.

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About the Author:

Paul Gambles is licensed by the SEC as both a Securities Fundamental Investment Analyst and an Investment Planner.

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