Markets will stay volatile as investors digest ‘noisy’ data points and try to figure out where inflation is really coming from, UBS investment chief says

Volatility is going to stay in stocks until a trend on where inflation is headed becomes clearer, UBS investment chief Mark Haefele told Bloomberg TV.

  • Stocks will stay volatile as investors continue to be inundated with “noisy data” points, UBS’s investment chief said.
  • “So everybody’s really trading on all these different data points,” Mark Haefele told Bloomberg TV.
  • Volatility is going to stay in stocks until a trend on where inflation is headed becomes clearer, he said.

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Stocks will stay volatile as investors continue to be inundated with a mixed bag of economic data and try to figure out where inflation is really coming from, said UBS investment chief Mark Haefele.

“We’ve got lots of noisy data like CPI, core, and headline, we’ve got the jobs data,” he told Bloomberg TV.

While the July consumer price indexed showed inflation slightly cooled to 8.5%, the labor market performed much stronger than expected last month, with payrolls swelling by 528,000, more than double the median estimate of 250,000.

“So everybody’s really trading on all these different data points,” Haefele said, pointing to the market’s mixed reception to data this summer.

Volatility is going to stay in stocks until a trend on where inflation is headed becomes clearer, Haefele said, as investors are trying to answer a big question about the market: “How much of this inflation is due to supply chains, and how much is simply … a function of monetary policy and too much money sloshing around in the system?”

For its part, the San Francisco Fed weighed in on this issue in June. Vice President Adam Shapiro wrote that supply-side issues account for around half of the inflation run-up, and demand-side issues account for around a third.

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“We’ve got lots of noisy data like CPI, core, and headline, we’ve got the jobs data,” he told Bloomberg TV.

Source: https://markets.businessinsider.com/news/stocks/stock-market-outlook-volatility-vix-inflation-fed-rate-hikes-ubs-2022-8?op=1

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