stagflation

According to Jin Shi's report, Federal Reserve's Goolsbee expressed that he is concerned that the war in Iran will not only slow down economic growth but also raise inflation rates, putting the Federal Reserve in a tricky situation. Goolsbee stated, "What I am most worried about right now is that we have to deal with the impending oil crisis, which will lead to rising prices in the form of stagflation."

According to Jinshi News, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated that the preliminary PMI index survey data for March indicates concerns over the slowdown in U.S. economic growth and rising inflation. Businesses report that uncertainty from conflicts and the cost of living have affected demand, while instability in financial markets and limitations on purchasing power have exacerbated the situation. The survey shows that consumer price inflation has risen to around 4%, suggesting that the U.S. may face the risk of stagflation, and the Federal Reserve needs to weigh the risks of rising inflation against weakening economic growth momentum.

Shigeto Nagai, the head of Japan's economy at the Oxford Economic Institute, stated that considering the possibility of stagflation in the Japanese economy, we currently expect the central bank to postpone the next interest rate hike from June to July. After that, the central bank is expected to continue gradually raising interest rates in the first and third quarters of 2027. In the short term, rising energy costs will accelerate supply-side driven inflation again.We now believe that the core CPI will not return to 2% until the second quarter of 2027, instead of the fourth quarter of 2026. Although the results of the spring wage negotiations are expected to be strong, higher inflation will limit real income growth.Therefore, we have lowered our 2026 real GDP growth forecast by 0.4 percentage points to 0.3%. Despite concerns about inflation expectations and a weak yen, we believe the Bank of Japan may become more cautious about interest rate hikes, prioritizing the impact of rate increases on corporate profits and real household income.

According to Jinshi reports, the CICC research report pointed out that the Federal Reserve maintained interest rates at the March meeting, which aligns with market expectations. The dot plot and economic forecasts indicate an upward revision of inflation expectations, narrowing the space for interest rate cuts, and the overall policy orientation is cautious.Although Powell believes the economy remains resilient, CICC believes that the U.S. economy is entering a "stagflation-like" phase, and the Federal Reserve may continue to hold steady in the short term, with interest rate cuts postponed until the second half of the year.

According to Jinshi reports, Federal Reserve Chairman Powell stated that although the Federal Reserve is currently trying to find a balance between the tension of two major goals, this is not stagflation.

According to Jinshi News, Peter Cardillo, chief market economist at Spartan Capital Securities, stated that the Federal Reserve is behaving very cautiously, and interest rate cuts may have to wait until the fourth quarter, depending on the trend of energy prices. If energy prices remain at current levels, it will mean a higher inflation rate, with economic growth potentially below 1%, while the inflation rate will also be higher, creating a stagflation situation.

Cryptocurrency market maker Wintermute stated on social media that the situation in the Middle East has entered its third week of escalation, with Brent crude oil rising 26% over the week. The market has adjusted its expectations for interest rate cuts in 2026 to just one. Against this backdrop, the cryptocurrency market has outperformed all major asset classes except for crude oil, with BTC rising over the week, while stocks, bonds, and gold all experienced declines.In terms of digital assets, BTC rebounded about 10% from Monday's low, marking seven consecutive days of gains, and has regained the $71,000 level; ETH followed suit and maintained above $2,000. The Coinbase BTC premium indicator has reset, as the structural pressure of discount that persisted for months has dissipated. The spot Bitcoin ETF recorded its first consecutive five-day net inflow in 2026, totaling $767 million, with $251 million flowing in on Monday alone, led by IBIT; the Ethereum ETF saw a net inflow of about $160 million over four consecutive days.Strategy has increased its holdings by 1,360 BTC; Bitmine announced the purchase of ETH for $128 million, with the Ethereum Foundation selling 5,000 ETH directly to it through over-the-counter trading. The implied volatility index for BTC (DVOL) has compressed from 61 to 51, and the correlation between BTC and stocks has also significantly weakened.On the macro front, core PCE annualized at 3.1%, non-farm payrolls showed a decrease of 92,000, and the unemployment rate rose to 4.4%, with stagflation becoming the baseline scenario. This week, the Federal Reserve, European Central Bank, Bank of Japan, and Bank of England will announce their interest rate decisions on the same day, marking the most concentrated macro event in recent months.

According to Jinshi reports, Bank of America stated that the Federal Reserve will have to deal with another round of supply shocks—rising oil prices. In the economic forecast summary released before the March Federal Reserve meeting, overall and core inflation forecasts may be revised upward. The Bank of America report indicated that if long-term growth expectations are also revised upward, the median long-term interest rate dot plot may shift slightly higher. The bank believes that Powell may acknowledge the risk of stagflation while emphasizing a wait-and-see approach.

According to QCP Capital analysis, under the geopolitical shock triggered by the Iran conflict, BTC briefly fell below $63,000 before rebounding to around $70,000, showing relative resilience.The volatility in the options market has retreated to the mid-50s, with risk reversals still in negative territory, indicating continued demand for downside protection. On a macro level, the stock market is under pressure, U.S. Treasury yields are rising, and expectations for interest rate cuts have been pushed back, reflecting stagflation characteristics in the market. In terms of oil prices, Brent crude briefly surged to $120 before retreating, with the IEA planning to coordinate the release of 300-400 million barrels from strategic reserves. Currently, BTC is more of a liquidity-sensitive macro tool rather than a high-beta risk asset. The market is focused on today's U.S. CPI data, which may determine whether expectations for interest rate cuts can be reignited.

Barclays Bank expects that if oil prices remain around $100 per barrel and economic growth stays stagnant, the earnings per share (EPS) growth rate for European companies is likely to drop to a lower single-digit level, with the STOXX Europe 600 index falling to about 550 points.Historically, during periods of stagflation, the energy, utilities, and healthcare sectors tend to perform better, while financial, telecommunications, and consumer sectors often lag behind. The bank stated in a report that although the energy consumption intensity of the economy has decreased over time, the growth of the economy still faces risks, as Europe relies on Middle Eastern energy supplies for as much as 30%.

Benoit Anne from MFS Investment Management stated in a report that, given the potential strength of the global economy, the threat of stagflation this time is far lower than after the Russia-Ukraine conflict in 2022. The head of the company's market insights team noted that there are concerns in the market about a severe inflation shock following a significant surge in oil prices, "but currently we believe the risks of persistent inflation are not the same."He mentioned that it is reassuring that the inflation market seems to agree with this view. He pointed out that the one-year inflation breakeven rate in the U.S. appears to have broken upward, while longer-term rates such as the five-year and ten-year rates have not changed much.

According to Jinshi News, Seema Shah, Chief Global Strategist at Principal Asset Management, has warned that recent employment data is pushing the U.S. economy into the realm of stagflation. A cooling job market signals rising economic risks, but it also opens the door for interest rate cuts, especially in the context of oil price shocks complicating monetary easing expectations. She stated that the emergence of stagflation tendencies is a troubling development for the market.

According to the macro briefing released by Binance Research, a review of eight major energy supply disruptions from 1979 to 2019 shows that oil price trends exhibit a "two-phase" pattern: the first phase is the "hesitation period" (0-30 days), where market pricing reflects uncertainty rather than scarcity, with a historical average increase of only about 2%. However, on the fifth day of the current conflict, Brent crude oil has already risen by 9%, indicating that the market is pricing in tail risks in advance.The second phase is the "scarcity digestion period" (30-360 days), which begins when the 25-day inventory buffer of Gulf countries is exhausted, leading to forced production cuts. The historical average increase during this phase is 44%, with extreme cases reaching 110%-140%. The report notes that the daily oil flow through the Strait of Hormuz has dropped from a normal 16 million barrels to 4 million barrels, and Gulf countries have only 25 days of buffer left. When the tank utilization rate reaches the critical threshold of 85%, oil fields will be forced to shut down, and oil prices will enter an accelerated phase of the "scarcity digestion period." If oil prices remain between $85 and $95, a CPI increase of 30-40 basis points is manageable; if oil prices rise to $115-$130, CPI will increase by 110-150 basis points, potentially delaying Federal Reserve rate cuts until 2027; if oil prices exceed $180, CPI will rise by over 300 basis points, possibly triggering stagflation.Currently, Bitcoin maintains a correlation of over 0.9 with tech stocks. If oil prices remain above $110, a CPI rise to 3% and real interest rates exceeding 2.5% will trigger a sell-off in tech stocks, at which point the correlation between Bitcoin and U.S. stocks may break, triggering a shift in the "digital gold" narrative. Key indicators to watch include: vessel traffic through the Strait of Hormuz, inventory utilization rates in Gulf countries, CPI data on March 11, Federal Reserve guidance on March 18, whether the 10-year TIPS real interest rate exceeds 2.5%, whether the 30-day correlation between Bitcoin and the IGV index falls below 0.5, and whether ETF fund flows turn into net inflows.

"Fed's Mouthpiece" Nick Timiraos recently wrote that Federal Reserve officials have cut interest rates for the third consecutive meeting, but inflation and the labor market should be greater concerns. There are unusual divisions within the Federal Reserve, leading officials to suggest a low willingness to continue cutting rates.Recent public comments from Federal Reserve officials indicate a severe split within the committee, to the extent that the final decision may depend on how Fed Chair Powell wishes to proceed. Powell's term will end next May, meaning he will only preside over the next three interest rate-setting meetings. The persistent price pressures, coupled with a cooling labor market, present an unpleasant trade-off for the Federal Reserve, a situation not faced in decades.During the so-called "stagflation" period of the 1970s, the Federal Reserve's stop-and-go approach to similar dilemmas allowed high inflation to become entrenched. UBS Chief U.S. Economist Jonathan Pingle stated, "As rates approach neutral levels, each rate cut loses more support from participants, and you need data to motivate those participants to join the majority for a rate cut." (Jin Shi)

The U.S. monetary system is facing a new round of political shocks. The confrontation between Trump and the Federal Reserve has escalated from a war of words to a substantial power grab, as he attempts to dismiss Governor Cook and install economic advisor Milan into the FOMC, aiming to create a "super majority" that supports significant interest rate cuts. Several economists have pointed out through modeling that if monetary policy falls under political control, the U.S. will first experience a brief prosperity characterized by growth and low unemployment, followed by structural consequences of re-accelerating inflation, rising nominal interest rates, and declining economic growth, with the risk of stagflation from the 1970s re-emerging. Analysis also indicates that politicians' dominance over interest rate decisions is often closely tied to election cycles; while short-term stimulus can create superficial prosperity, the cost is uncontrollable inflation and subsequent deep adjustments. If Trump succeeds in reshaping the board before 2026, the independence of the Federal Reserve may be eroded, and the dollar's reserve status and long-term borrowing costs could be re-priced by the market.Bitunix analysts' perspective: From historical examples to current tactics, Trump's strategy clearly points to direct intervention in the interest rate path, and the consequences will not be short-term fluctuations, but rather a credit discount at the institutional level. If the Federal Reserve is forced to make significant dovish shifts before inflation is under control, the U.S. economy will enter a typical cycle of "prosperity first, then stagflation." For global capital, the real risk is not Trump himself, but the loss of the last line of defense in U.S. monetary policy.

ChainCatcher news, according to Jinshi reports, Minsheng Macro Research states that the Federal Reserve's interest rate cuts are the beginning of the problem, not the end. An increase in the magnitude of rate cuts may trigger inflation risks, while insufficient rate cuts could lead to political risks. The dot plot suggests a 75 basis point cut within the year, an increase of 25 basis points from June. In the future, factors such as a cooling labor market and sticky inflation will complicate the Federal Reserve's decision-making, and the market may price in more rate cuts.

ChainCatcher news, according to Jinshi reports, Federal Reserve official Goolsbee stated that a series of shocks are pushing the United States toward a stagflation situation.