Morgan Stanley IM: Wages, Inflation, Stability, Policy: Something’s Got to Give

Morgan Stanley IM: Wages, Inflation, Stability, Policy: Something’s Got to Give
Fixed Income

Jim Caron, Co-Lead Global Portfolio Manager and Co-Chief Investment Officer, Global Balanced Risk Control Team, shares his macro thematic views on key market drivers.

30.05.2023 | 05:40 Uhr

Jim Caron

  • The key macro factors at the moment are: 1) jobs/wages; 2) inflation; 3) financial market stability; and 4) central bank policy. Each are seemingly at odds with the other.
  • Labor markets remain tight and inflation remains stubbornly high…why is that?
  • We agree with Chairman Powell and the academics on this one: wages are not the cause for inflation, they are the result of it. Thus, a softening labor market that cools wages needs to be preceded first by a slowing economy.
  • But does the economy need something to break in order to lower inflation, or is it different this time? We discuss in today’s audio.

 

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Risk Considerations

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