Markets fear autumn storms

Distraught by the persistence of inflation, Wall Street suffered a severe blow last Tuesday. ANDREW KELLY/REUTERS

DECRYPTION – Inflation and recession worry investors.

The beautiful summer on the markets is only a distant memory. Dark clouds are gathering on the horizon. This summer, investors were hoping for a decline in inflation and a more lenient attitude on the part of central banks. They quickly became disillusioned. At the end of August, at the end of the annual symposium of central banks, in Jackson Hole, Wyoming, Jerome Powell, the boss of the powerful American Fed, ruined these hopes.

He declared himself determined to use “all the tools available” to stave off galloping inflation. Since then, stock market indices have continued to plummet. In one month, the equity markets, in the United States and in Europe, lost around 10%. The Vix, a measure of volatility on Wall Street, also known as the “fear index”, jumped 35%.

Tighten the screw

Inflation is indeed far from settling down. Worse, previously it was essentially linked to soaring energy prices; now it is spreading everywhere. Last Tuesday, Wall Street suffered a severe…

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