Oh boy.
Global freight rate for containers just surged 61% this week.
Not the time to celebrate the end of inflation.
A second wave is likely underway.
H/t @dailychartbook pic.twitter.com/X9K2DZJDWR
— Otavio (Tavi) Costa (@TaviCosta) January 5, 2024
The global freight rate for containers has surged by a staggering 61% this week, casting a shadow over the optimistic outlook on the end of inflation. This sudden spike in freight costs is viewed as a potential harbinger of a second wave of inflation, prompting a shift in interest rate futures towards a less dovish stance. The odds of experiencing 7 or 8 interest rate cuts in 2024 have halved, signaling a growing consensus that inflationary pressures may persist.
Despite recent market volatility and economic uncertainties, the base case still suggests a significant number of rate cuts, totaling 150 basis points in 2024. This projection, which is twice the forecast made by the Federal Reserve in its latest meeting, underscores the challenges of the Fed-to-market disconnect. As economic indicators fluctuate, the disconnect persists, raising questions about the effectiveness of the Fed’s strategies in navigating the complex economic landscape.
Interest rate futures are beginning to shift back in the less dovish direction.
Odds of 7 or 8 interest rate cuts in 2024 have halved this week.
Also, odds of rate cuts beginning this month are down to just 7%.
However, the base case still shows 6 rate cuts for a total of 150… pic.twitter.com/hyBU7bnPQu
— The Kobeissi Letter (@KobeissiLetter) January 4, 2024
Amid these concerns, a startling statistic emerges – half of all American workers now earn less than $41,000 per year. With median rent and essential expenses consuming a significant portion of their income, the financial strain on the average worker becomes evident. This highlights the need for a comprehensive approach to address both inflationary pressures and the growing economic disparity faced by a substantial portion of the American workforce.
Half of all American workers now make under $41,000 per year.
That comes to $3,400 per month.
Given the median rent is $1,978 and used car payment is $528, that leaves precisely $894 for everything else — food, utilities, medical insurance and premiums, clothes, car repairs,… pic.twitter.com/tP0hFsxVPn
— Peter St Onge, Ph.D. (@profstonge) November 29, 2023