L’inflation américaine s’est envolée à 4,2 % l’an en avril, après 2,6 % en mars ; un plus haut depuis septembre 2008, sous le coup d’une hausse mensuelle des prix de 0,8 % et de puissants effets de base. Mauvaise surprise, l’inflation sous-jacente, s’est également emballée à 3 %, contre 1,6 % en mars. À première vue, ces résultats ne sont pas bons et certains ne manqueront pas d’y voir la concrétisation d’un environnement définitivement plus inflationniste. Les détails du rapport ne valident pas ce diagnostic, tout du moins, pas à ce stade. Au-delà de l’impact des effets de base, l’accélération de l’inflation tient, en effet, à quasiment un seul phénomène : l’envolée des prix des véhicules d’occasion de 10 % entre mars et avril, qui explique à elle seule le tiers de la hausse de l’inflation du mois d’avril.
Depuis ses débuts, la crise sanitaire n’a cessé d’entretenir les interrogations sur ses conséquences en matière d’inflation. Dans un tout premier temps, les risques de ruptures d’approvisionnement ont fait redouter une possible envolée des prix des produits de base ; mais les pénuries n’ont pas eu lieu. Dans un second temps, le choc de demande a agité le spectre d’une nouvelle jambe de déflation conforté par la décrue de l’inflation sous-jacente dans de nombreux pays. La vigueur de la reprise économique mondiale au troisième trimestre a néanmoins éloigné ces craintes et, avec l’amorce des vaccinations, l’hypothèse d’une escalade inflationniste a fini par les supplanter. Sur les marchés, les annonces de dispositifs inédits de relance budgétaire ont dopé les anticipations d’inflation tandis que l’envolée des cours des matières premières et la meilleure résistance de l’activité industrielle au regain de crise sanitaire ont fait le reste : ces deux derniers mois, l’indicateur Citi de surprise inflationniste est repassé en territoire positif pour la première fois depuis janvier 2019 et atteint aujourd’hui un plus haut depuis 2017.
Quel diagnostic porter sur ces observations ? L’accélération des prix aujourd’hui observée est-elle frictionnelle ou plus fondamentale et, à ce titre, prémonitoire ? C’est plus à une question de prix relatifs entre industrie et services que nous conduit notre diagnostic à ce stade.
This week’s figures from the US Energy Information Administration (EIA) seem to have stopped traders speculating on rising prices in an overheating oil market. Lower inventories, higher production and lower US imports raised doubts about whether the current oil price is fair, after market euphoria in the last few months took it from $46 per barrel on average in June to over $71 on 25 January. The price of Brent North Sea crude, which had been wavering since the previous weekly report, gave way after Wednesday’s figures and seemed on track to end the week below $64.
Bond yields have barely responded to the move so far. However, that may not last if, as we expect, oil prices keep falling and drag metals down with them, since the rise in metals prices in the last few months has little fundamental justification.
If our scenario proves correct, that would seriously change the context, affecting inflation expectations, bond yields, the forex market and the relative performance of emerging markets and individual sectors. Overall, there is a significant risk that developments seen in the last few weeks will reverse as quickly as they occurred.
Although such adjustments could reduce the downward pressure on indexes resulting from fears that interest rates will rise too quickly, they would definitively rule out the reflation scenario that the markets have been overwhelmingly backing since mid-December. In the best-case scenario, this could stall the correction, without necessarily pushing markets back up to their recent highs.
Trends in the financial markets have accelerated in the last few days. After hesitating slightly at the start of 2018, it is increasingly obvious to investors that reflation is around the corner. That belief is based on widespread growth, a surging oil price, the first positive effects of Donald Trump’s tax reform – with giant US companies promising to repatriate profits – and good news on investment and jobs. It is hard to see how that situation could fail to end the phase of latent deflation in the last few years and support expectations – seen throughout 2017 – of inflation getting back to normal. The impact of rising oil prices alone could significantly change the inflation situation, judging by how sensitive inflation is to movements in oil prices. If crude stabilises at $70 per barrel between now and the summer, inflation could rise by more than half a point in the industrialised world, taking it well above the 2% target that it touched only briefly in February 2017.
So what could prevent a significant increase in interest rates? It is very tempting to change our outlook for 2018. How is the interest-rate environment likely to develop?
2018 has started on a confident note. After a very strong end to 2017, when global economic growth probably accelerated back over 4%, impressive indicators in early 2018 mean that there is no room for scepticism: growth looks like it is here to stay. There is plenty of evidence to support that view, including exceptionally loose monetary conditions at the global level, an upturn in business investment and international trade, a widespread decline in unemployment, and at least temporary support from the US tax reforms adopted late last year. To cap it all, wealth effects are increasingly visible, driven by exceptionally high valuations for financial and real-estate assets.
Summary– Current economic trends seem particularly favorable, but after taking a step back, we are inclined to be more circumspect than the consensus of economists on the outlook for 2018. Our worldwide scenario has changed little since September. Our global GDP growth forecast for 2017 remains the same, at 3.6%, and we have lifted our 2018 scenario slightly to 3.3% from 3.2%. Upward revisions to our 2017 estimates for the developed world offset the declines we project in emerging markets. Meanwhile, we continue to foresee a modest global slowdown in economic activity next year as a result of reduced US and Chinese growth.
In this context, and amid the structural changes underway, worldwide inflation does not look ready to accelerate. It should fall from 2 % on average this year to 1.8% next year, in the wake of declining raw material prices. With no inflation on the horizon, central banks will maintain their very accommodative bias. Restricted by a persistent flat yield curve, the Fed will have trouble carrying out the three key interest rate increases it has planned. The ECB will remain particularly conservative and is unlikely to have an opportunity to take a position on a future increase in key rates.
The dollar is set to disappoint and maintain pressure on other countries. Japan, now benefiting from a more promising environment, is probably the country best placed to absorb the market’s wariness with regard to the US currency. Our exchange-rate scenario remains unchanged from our September projections and includes a substantial appreciation in the yen.
In the short run, we think exposure to risk is still a viable strategy, so long as it is focused on developed markets. But the current environment requires investors to be ready to change direction at a moment’s notice. For this reason, we have developed a fundamental allocation to complement our short-term, tactical recommendations.
Until now, economists have not been particularly worried by the euro’s rise since the beginning of the year, given that business trends and confidence in future growth had gained momentum. At less than $1.20 since mid-summer, the euro is trading well below certain past levels and also more in line with its purchasing power parity. Recent data indicate, however, that the single currency’s appreciation has had a significant impact on corporate margins and on import prices, resulting in a reduction of core inflation rates in the eurozone. This is relatively disconcerting at this stage in the business cycle and may be behind the sluggish stock markets of the past few months.
While the USA is entering an extended phase of growth, Europe is enjoying a rapidly improving outlook and Japan is apparently recovering from two lost decades, emerging-market countries are struggling to keep up. Brazil and Russia have turned the corner after several years of recession, which means that average emerging-market growth rates are now higher than in the last two years. However, they are still disappointing. After a few encouraging months, the improvement in leading-activity indicators already seems to be fading. Exports of manufactured goods are benefiting only slightly from the upturn in global demand, while commodity exports are continuing to suffer from weak growth in export volumes and very varied price trends.
The situation seems not to be worrying observers or the markets, which are generally taking the view that the improving global outlook will eventually filter through to emerging-market countries. This is probably optimistic, given current trends. Indeed, there is a risk that disappointing performance in the developing world could drag down the global economy.