Inflation remains the KEY driver of everything across assets. This has been evident throughout the beginning of 2023 as equities have recently sold off despite a pretty decent comeback to growth (on the surface). A sell-off ignited just because inflation allegedly re-accelerated alongside it.

We find several similarities to the surprising spike in prices in August/September after the first peak in annualized price pressures in June-2022. After all, disinflation was never going to occur in a straight line.

Let’s have a look at a few interesting observations which may make you more comfortable on the inflation outlook.

Chart 1. Perfect inverse relationship between S&P 500 and inflation since 2021