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Inflation Data Calling the Shots as Market Correlations Snowball

  • Link between Citi surprise index and asset moves is elevated
  • Good news is bad for stocks, bonds in inflation-driven world

Quant or a stock picker, retail or pension fund manager, everyone is a macro trader in this inflation-driven era -- and it’s only getting worse. 

The link between the S&P 500 and Citigroup Inc.’s widely followed surprise index for the US economy has jumped to the most negative since 2015. Hotter-than-expected economic data are fueling expectations that the Federal Reserve will enact disruptive rate hikes -- sending stocks toward fresh bear-market lows.