Valuation – Average Forward P/E in Core PCE Inflation Ranges Since 1976 Historically, inflation generally had a negative impact on valuations when core PCE approached 2%, in the anticipation of rate hikes. Image: Goldman Sachs Global Investment Research
Inflation – S&P 500 LTM Sales Growth vs. Core CPI Since 1970 Rising inflation tends to boost S&P 500 earnings. According to Goldman Sachs, a 100bp increase in average annual core CPI would lift the S&P 500 EPS to $170 in 2021. Image: Goldman Sachs Global Investment Research
Inflation – U.S. Core CPI Goods and Core CPI Services 20 years of almost no inflation in goods. Image: Deutsche Bank Global Research
U.S. Business Cycle: Output Gap vs. Core PCE Inflation The mature phase of the U.S. business cycle began 24 months ago. The mature phase lasted 72 months in the late 1960s and 57 months in the late 1990s. Image: NBF Economics and Strategy
U.S. Core CPI Forecast Goldman Sachs expects hotter U.S. core CPI than markets in September and October, but cooler readings in November and December, meaning markets underprice near-term inflation risk while overpricing its persistence later. Image: Goldman Sachs Global Investment Research
Fed Funds Rate vs. Gasoline Price / Core CPI When gasoline prices rise faster than inflation and move in step with growth, the Fed tends to lift rates. But what is the determining factor this time: strong demand or deep strain? It’s clearly the latter. Image: TS Lombard
Trade Weighted Dollar vs. U.S. Inflation Surprises Since February 2025, the U.S. dollar has closely tracked inflation surprises, as both headline and core inflation came in lower than expected, reflecting Fed policy expectations and concerns about the U.S. economic outlook. Image: Societe Generale Cross Asset Research
Inflation Forecasts If Trump implements a 25% tariff on imports from Canada and Mexico, along with a 10% tariff on imports from China, it could push U.S. core PCE inflation above 3% in 2025. Image: Deutsche Bank
Sentiment Scores During Earnings Calls In recent quarters, falling inflation and the prospect of lower interest rates have had a positive impact on U.S. corporate sentiment, which is seen as a favorable sign for the U.S. economy. Image: BofA US Equity & Quant Strategy
U.S. Core CPI vs. Unemployment Rate When Fed First Cut Rates It is rare for the Fed to cut rates when core CPI exceeds the unemployment rate, signaling the central bank’s concern about potential inflationary pressures and its emphasis on maintaining price stability. Image: BofA Global Investment Strategy
U.S. Core CPI Minus Unemployement Rate % vs. Fed Funds Rate The Fed rarely cuts rates when core CPI exceeds the unemployment rate, reflecting the central bank’s concern about potential inflationary pressures in the economy and its emphasis on price stability. Image: BofA Global Investment Strategy