Credit Faces Worst of All Worlds in Stagflation Risk: Macro View

Corporate debt is priced for perfection even as risks of stagflation rise. That implies a bigger credit market reckoning if consumer prices stay high and the economy buckles under the weight of escalating trade wars.

• Tariffs have the potential to significantly boost US inflation and tip trading partners into recession. That raises the risk of a US economic slowdown and layoffs as prices stay high, aggravated by tough immigration policy.
• According to Bloomberg Economics, Donald Trump’s tariff wrecking ball could erase 1.2% from US gross domestic product and add 0.7% to core inflation. The moves may deliver “a significant supply ...