Energy Cable: Good luck reaching your 2% target, Powell
Greetings from a sunny but windy Copenhagen where we bring you a short but chart heavy edition of the Energy Cable. What a week in macro and markets, huh? The CPI print out of the US confirmed our tilt towards a reacceleration of inflation and the difficulties Powell faces in getting to the 2% target.
The below chart supports that thesis with all components in the basket of global inflation drivers except for supply chain pressures (Which imho are still tight, just ask the Egyptians) having risen over the course of 2024 and in aggregate pointing towards headline inflation YoY at around 4.5%.
Chart 1.a: The 2% target looks increasingly further away. Allocate accordingly!
The reflation will likely continue as long as Powell and his ilk keeps an implicit dovish bias intact. Energy markets will likely remain bid, but the broader commodity story seems more interesting to play than oil at these levels.
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