Over and over again, Federal Reserve officials have advised that any pickup in inflation this year was bound to be transitory. Traders in financial markets, however, aren’t so sure.
Investors have become fixated on widespread signs of price pressures as commodities like copper and lumber surge to records, and the bond market’s expectation for inflation over the next decade climbs to an eight-year high. The focus is triggering swings in the stock market, sending the Cboe Volatility Index to the highest since March on Tuesday.
The most-recent round of U.S. corporate earnings calls showed the word inflation was back in vogue, with its usage rising 800% from a year ago, according to Bank of America Corp. Even last week’s payrolls report, which showed the U.S. added only about a quarter of the jobs economists expected in April, is being viewed as a sign that companies will have to boost wages to entice more unemployed workers into the labor force.