You can figure out if Wall Street's biggest worry is for real by asking your boss one simple question
- Wall Street's nascent fears of inflation may be overstated given this week's subdued data on consumer prices and averagely hourly earnings.
- HSBC Global Head of Currency Strategy David Bloom tells Bloomberg TV inflation is nowhere on the horizon.
- "If you don't believe me, go demand a pay rise from your boss this afternoon, see how you [fare]," he said.
Wall Street has grown worried about a possible spike in US inflation following the passage of tax cuts at a time when the unemployment rate is already at a 17-year low.
However, US inflation continues to undershoot the Federal Reserve's official 2% target, as it has for most of the economic recovery from the Great Recession.
HSBC's global head of currency strategy, David Bloom, had a challenge for Bloomberg TV viewers who distrust his bank's view that there's no risk of inflation on the horizon at all.
"There's no inflation," he said in an interview. "We've been trying to tell you that for ages and all these guys come on your show and tell you for four, five years, bond yields are going up, they're going to heaven and they never do. They haven't even broken 3%."
"If you don't believe me, go demand a pay rise from your boss this afternoon, see how you [fare]."
Data this week corroborated that view.
US consumer prices rose 2.2% in the year to February while prices excluding food and energy rose just 1.8%. Fed officials target a 2% rate on another inflation measure, the personal consumption expenditures index, which has stayed stubbornly below the central bank's goal.
A separate Labor Department report showed average hourly earnings adjusted for inflation are weakening, not strengthening- as Fed officials hope and market participants fear. Not only did earnings stagnate last month, the following chart shows just how much conditions have deteriorated in the last year - for workers across the board and for non-management employees in particular.