Liquidity, Inflation, Business Cycle: 3 Macro Shifts
As three crucial macro indicators—inflation, liquidity, and the business cycle—show significant changes, global markets are about to enter a critical phase. It’s possible that investors are underestimating the possible effects on both conventional and cryptocurrency markets. Liquidity limitations are transient, inflation seems stable, and early indicators point to the end of the business cycle’s low point. Analysts caution that market possibilities and volatility may increase as December draws near.
Consumer Pressure Persists Despite Stable Inflation
A 2.5% annualized inflation rate, marginally higher than the Federal Reserve‘s 2% target, is shown by real-time data from Truflation. Conventional BLS data, which displays inflation at 2.3%, confirms this steadiness. Macro strategists claim that the Fed has flexibility to pursue a 3.1% terminal rate because of this controlled trajectory. It may open the door to a rate reduction in December. Consumer pressure in industries like insurance and groceries, however, shows that overall inflation could not accurately reflect actual economic strain. Although this stabilization does not yet indicate the significant relaxation that risk assets usually desire, it does signify less impending tightening for markets.
Business Cycle Recovery and Liquidity Boost May Stir Market Swings
The US government shutdown, which temporarily blocked over $200 billion in fiscal spending and caused the Treasury General Account to surpass $1 trillion, appears to have limited liquidity. Analysts predict that liquidity will return to the markets after the shutdown is resolved, which might lead to notable short-term rallies. New Orders, one of the ISM Manufacturing Index’s forward-looking components, is slightly improving. This indicates that the economy may have passed its lowest point. When taken as a whole, these signals point to a complex configuration that could hasten market swings in the last few weeks of the year: stable inflation, momentarily frozen liquidity, and an early-stage business cycle comeback.
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