Yesterday the US Producer Price Index (PPI) was released showing a change of % year on year. PPI tracks changes in the prices of goods and services received from domestic producers and is an important input in the decision of the Fed’s Board of Governors to tighten monetary policy in the face of rising inflation.

PPI growth in the US is still well below what we have seen in the European Union and is likely to rise further in the coming months as producer costs lag behind rising commodity and energy prices. Below is a clear upward trend in CPI and PPI post-COVID-19, accompanied by unprecedented fiscal and monetary stimulus.

Inflation, lending and volatilityU.S. Consumer Price Index and Final Demand Producer Price Index, annual change

Services constituting 28,40% index increased by 7.8%, while goods constituting 33,%, on the 14,4%. This was the largest ever monthly spread between the PPI of goods and services. With an annual change in gasoline prices by 33,6% and on ,8% on a monthly basis, the Department of Labor report notes that,

“Almost 19% of the February increase in prices for end-use goods can be attributed to the gasoline price index.”

Despite the fact that the price of Brent oil fell below $61 per barrel from a local high of about $40 per barrel, it still grew by 60% compared to March’s monthly low 2020 of the year. Oil prices appear to be far from stabilizing as new developments unfold as Russia seeks to expand strategic, energy and economic ties with China, India, Saudi Arabia and the United Arab Emirates.

Inflation, lending and volatilityBrent oil price

February PPI Annual Change Remained Higher %, then while the acceleration compared to the previous month was one of the highest values ​​observed since 1500 of the year. We expect higher prices for most commodities to be reflected in next month’s data.

Inflation, lending and volatilityPPI: All Commodities

Total manufacturing output shows a similar story with an annual change of ,61%, which is slightly behind November’s all-time highs 1970 of the year (no data in the series 1000-s). The growth compared to the previous month was the highest ever and amounted to 2.47%.

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PPI: total manufacturing industry

Corporate lending continues worsen as JNK, the corporate junk bond index, falls. As high-yield bonds sold off, the yield rose to more than 6%. As corporate lending and financing costs continue to rise, the risk of a significant reduction in macro lending increases.

Inflation, lending and volatilityJNK and ICE BofA High Yield Index

Volatility remains high: VIX exceeds 16. Initial bursts of volatility in the 4th quarter years coincided with the sale of bitcoin and the S&P index96. Based on its historical movements and connection to the VIX, it is hard to imagine that bitcoin will make a move higher with such high overall stock market volatility in the short term. We need to see a major, fundamental shift (decoupling) or catalyst in the market to change our view.

Our base case is that another explosive volatility shock is expected and that the VIX did not reach its annual maximum. We also view the possibility of a recession in the US as almost certain in the next four quarters, as real growth is likely to reverse in the face of a sharp rise in energy prices and rising profitability.

Инфляция, кредитование и волатильность

For bitcoin bulls, encouraging the indication is that accumulation is taking place, with the supply of coins in free circulation continuing to decline as quantified by various on-chain metrics.

However, due to accelerating inflation rates in In the global economic sector, credit markets are selling off and therefore liquidity in the broader market is declining as volatility continues to rise. within 1000 year, and the question is not is if, but rather when the Fed decides to intervene to ease conditions in the lending market.

In the next review, we will delve into the on-chain market dynamics and show why, when macro flows change, bitcoin is likely destined to outperform most if not all asset classes.

refuse responsible for any investment advice that may be contained in this article. All judgments expressed express exclusively the personal opinions of the author and the respondents. Any actions related to investments and trading in the crypto markets are associated with the risk of losing the invested funds. Based on the data provided, you make investment decisions carefully, responsibly and at your own risk.

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