Northern Trust Wealth Management CIO


As supply chain bottlenecks persist, investors are bracing for arrears to continue next year, fueling fears of even higher inflation.

“The biggest risk we have right now is that inflation expectations are no longer anchored,” Katie Nixon, chief information officer of Northern Trust Wealth Management, said Monday at Yahoo’s All Markets summit. Finance when discussing the higher prices driven by the current supply chain crisis. “We have seen expectations rise quite noticeably over the past two weeks.”

To put inflationary pressures into perspective, the consumer price index has climbed at least 5% on an annual basis over the past five months. The most recent reading showed that inflation rose 0.4% in September, taking the year-over-year increase to 5.4% and, in turn, matching the largest annual gain since August 2008.

And consumer expectations for inflation remain high, according to a recent report from the Federal Reserve Bank of New York. Inflation expectations for the coming year hit 5.3% last month, marking the eleventh consecutive monthly increase and a new high since the survey began in 2013.

The higher inflation expectations among investors and consumers come as Federal Reserve Chairman Jerome Powell warned last week that “constraints on the supply side have worsened” and risks are now linked to “longer and more persistent bottlenecks”.

The White House is paying close attention to the issue as higher prices are hitting Americans at home. President Biden outlined his plan to keep the ports of Los Angeles and Long Beach open 24/7 to help ease pressures on the supply chain, but a number of experts warn that his plan does not go far enough, and in turn will do little to bring inflation under control in the short term.

In a recent interview with Yahoo Finance Live, CEO and President of the American Apparel and Footwear Association, Stephen Lamar, said that ordering 24/7 operations at major West Coast ports is “too much. Late to do much now “.

“It really is a crisis that has taken on unprecedented proportions,” Lamar explained, referring to supply chain issues. “It is really going to take a concerted and continued effort on the part of the US government to really try to move us forward and get us out of the crisis we are going through right now.”

While the broader market may not reflect investor concerns as we approach all-time highs, policymakers and strategists are keeping a close eye on price increases, and it’s a problem that Nixon is looking for. expects it to take about a year to work. through.

” We see [inflation] expectations are rising as supply chain problems persist for longer than expected… This is probably the biggest risk in the market right now, ”added Nixon. “But we believe, however, that a year from now investors won’t be worried about inflation. It’ll pass, it’s just going to take a little longer.

Seana smith anchors Yahoo Finance Live’s 3:00 p.m. to 5:00 p.m. ET program. Follow her on Twitter @SeanaNSmith

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