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Over recent weeks, since January 26 to be exact, financial markets have seen the most notable spike in volatility experienced over the last two years. The calmest period in financial markets since the 2008 crisis has been swiftly disrupted by the mounting conDon’t panic
Over recent weeks, since January 26 to be exact, financial markets have seen the most notable spike in volatility experienced over the last two years. The calmest period in financial markets since the 2008 crisis has been swiftly disrupted by the mounting concerns on inflation risks in the US. Despite the ultra low level of unemployment in the US, currently 4.1 per cent, the Federal Reserve (‘Fed’) was still awaiting to see signs of wage growth pressures – not the quantum of jobs created but the level of capacity utilisation within the labour market. Market players have therefore been eyeing the monthly US non-farm payroll reports, giving particular focus to the average hourly earnings growth figure in order to anticipate changes in monetary policy by the Fed and reassess the inflation outlook in the US. January’s employment report which was reported on February 2 showed the strongest rate of wage growth recorded since May 2009. The year-on-year increase in average hourly earnings reported for January came in at 2.9 per cent, exceeding market consensus expectations of 2.6 per cent. This piece of information gives the Fed a long awaited sign of rising price pressures in a tight... Read more