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Persistent Risk Premium Threat

Macroeconomics
225 Views, 11 May 2022 01:51
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EXECUTIVE SUMMARY
  • Economies are increasingly facing stagflationary squeezes. A series of additional cost shocks would extend the pressures even without traditional second-round effects.
  • Adapting to a higher operational risk premium could create additional shocks as firms pursue shorter and simpler supply chains that reverse the benefits of globalisation.
  • Forecasts implicitly assume risk premia normalisation, as they erroneously did with other risks after the Great Recession. More stagflationary errors may occur.
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Phil Rush
Chief Economist
Heteronomics
United KingdomMulti-AssetMacroeconomicsCross Asset Strategy

Philip Rush is the Founder and Chief Economist of Heteronomics. Until launching in November 2016, he was Nomura's Senior... 

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