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See here: Used car prices have soared in part because closures have led many city dwellers to buy cars, and because new car production has been hampered by closed factories and chip shortages. During the year ended in May, used car prices rose nearly 30%, according to the Bureau of Labor Statistics.
Before the pandemic, inflation – which the Federal Reserve would like to have around 2% – had been stuck near bottom for years. Today, the Fed finds itself finding an increasingly difficult balance between supporting the recovery with broad stimulus measures while controlling inflation.
As the recovery gathers pace, the things that drive inflation up are changing. For example, people are spending more money on dining out as pandemic restrictions are lifted, while returning to offices brings a work wardrobe refresh.
Data point: In the 12-month period ended in May, the price index for food eaten away from the home rose 4%, fueled by increased spending on food and drink in late spring while Covid restrictions have been reduced. Likewise, clothing prices rose 5.6% in the year ended May.
Ultimately, these pandemic-era price increases should normalize. Last month, Federal Reserve Chairman Jerome Powell, answering questions about soaring inflation at a press conference, said there was no reason to assume prices will stay this high. for an extended period. But how long they stay remains uncertain.
Powell is not the only one who expects lower inflation. The bond market rates post-pandemic inflation as low as before, Michael Fredericks said last week on CNN Business Markets Now’s digital live broadcast.
Last week, the 10-year Treasury bond yield fell to its lowest level since February, indicating that investors are likely viewing current price spikes as transient, or at least waiting to see how inflation plays out over the course of the week. of summer.
Coming soon: June consumer price data is due on Tuesday.
It’s raining unicorns
What’s happening: Between March and June, 136 new unicorns were created around the world – more than the 128 born throughout 2020 and a new record, according to data provider CB Insights.
The United States accounted for nearly half of the amount raised, with Silicon Valley leading the charge and consolidating its position as the world’s largest tech hub, if in doubt.
According to CB Insights, there have been 390 “mega towers,” where companies have raised $ 100 million or more, or triple the same quarter last year.
Details, Details: Among the top 10 deals of the quarter were the $ 1 billion fundraiser from the creator of Fortnite Epic Games, the $ 2.75 billion fundraising round from Swedish battery maker Northvolt and a $ 1.8 billion investment in Indonesian logistics company J&T Express.
Investor Perspective: The pandemic has clearly driven demand for digital services to a new level, evidenced by the staggering amounts raised by e-commerce, fintech and healthcare companies.
At the same time, a new generation of yield-hungry investors awash in central bank liquidity are becoming increasingly active in private finance. Many of these players are much larger than traditional venture capital firms.
“This puts a small number of financiers under control and raises serious questions about how wealth will be distributed as venture capital investment completes its transformation from a Silicon Valley cottage industry into one of the main engines of global finance, ”writes Richard Waters of the FT. .
following
Monday: Eurogroup finance ministers meet; Elon Musk sues Tesla’s SolarCity deal
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