Markets Could Face Inflation Shock Much Quicker Than Expected, Mizuho Says

Mizuho's Sean Darby warns the Middle East conflict will accelerate an 'inflation shock' that markets had been too benign about, implying inflation could rise faster than currently priced. That raises the odds of earlier or steeper central bank rate responses, higher energy and commodity prices, and increased market volatility, prompting a more defensive positioning by investors.

Analysis

Mizuho's Sean Darby warns the Middle East conflict will accelerate an 'inflation shock' that markets had been too benign about, implying inflation could rise faster than currently priced. That raises the odds of earlier or steeper central bank rate responses, higher energy and commodity prices, and increased market volatility, prompting a more defensive positioning by investors.