A return of "insanity premium"?

Research evidence excerpt

A return of "insanity premium"?

e Gini in the US is 0.48 vs 0.29 in the 0.0 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 Jan-24 Jan-26

EU and 0.35 in the UK). This does not mean that EU and others are not 10Y 30Y

facing pressures but, structurally, US and UK are more unstable and, hence,

frequently become sources of chaos. 2. While there is still a question mark Source: Bloomberg; Macquarie Global Strategy

over how US tariffs will evolve, the impact of the first phase has already

UK Inflation Break-Even rates (%)been absorbed. Byzantine exceptions combined with threats of more tariffs

is discouraging non-AI investment and does not lead to higher employment, 5.5 UK Inflation break-Even rates (%)

but market and electoral guardrails have thus far prevented a destructive 5.0

trade war. Alas, tariffs were followed by a real war (Iran). At the tail end of 4.5

tariff induced inflation (~50bps), US is absorbing an energy shock of at least 4.0

100bps, lasting through '26. Inflationary wave is also spreading, with IMF 3.53.0

raising global inflation by 60bps, with a warning that unless energy markets 2.5

normalize, there is a potential for another 100bps. On the current path, Mar-25 Mar-25 Apr-25 May-25 May-25 Jun-25 Jul-25 Jul-25 Aug-25 Sep-25 Sep-25 Oct-25 Nov-25 Dec-25 Dec-25 Jan-26 Feb-26 Feb-26 Mar-26 Apr-26 Apr-26

G4 CPI is bound to exceed 4%. 3. This places CBs in a quandary. While AI 2 Year 10 Year

is structurally disinflationary over the LT, how should policymakers react

Source: Bloomberg; Macquarie Global Strategy

to inflationary spikes? Usually, one would treat "Lizz Truss", tariffs and Iran

war as "once-offs". But, at what stage do once-offs" become a feature not a US Zero Coupon Inflation Swaps (%)