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Corporate Treasury Data Insights: inflation overshoots

Andrew Hollins
Andrew Hollins
Director of Corporate Treasury Proposition, Refinitiv

Andrew Hollins, Director of Corporate Treasury Proposition at Refinitiv, brings you a round-up of the latest Corporate Treasury Data Insights, including the impact of inflation and future interest rate rises on the global economy.

  1. The prediction by Reuters Breakingviews about high inflation has already manifested. What are the prospects for 2022 on both inflation and interest rates?
  2. A broader analysis of the macroeconomic landscape posits inflation and interest rates to be influencing factors over the coming year, along with geopolitics and the lingering impact of COVID-19, while the impact on stock markets is also under scrutiny.
  3. London Stock Exchange’s 2021 Debt Capital Markets Review presents analysis of key trends, and learn more about the electronification of FX Trading through a TreasuryToday Masterclass Series.

For more data-driven insights in your Inbox, subscribe to the Refinitiv Perspectives weekly newsletter.

Chart of the Month

Every year the global team at Reuters Breakingviews dust off their crystal balls, and with some previous successes (and misses) are brave enough to predict the future.

This year’s Reuters Breakingviews Predictions 2022 was published earlier this month and is titled: A World in Transition.

As the Reuters brand for financial commentary, Breakingviews is a leading source of agenda-setting financial insight.

One prediction that has already come true is excessive and unexpected inflation rates reaching levels well above central bank targets.

Reuters Breakingviews Predictions 2022 believes that while consumer prices will rise at a less hectic pace in 2022, they will still overshoot targets that Fed Chair Jay Powell and his peers aim to hit.

And while inflation rates climb, interest rates are likely to climb, too. Managing interest rate risk is thus firmly back on corporate treasury agendas once again.

How can Refinitiv’s Interest Rate Probability app help you manage interest rate risk?

The Refinitiv Interest Rate Probability app (IRPR) provides insight into the likelihood, timing and magnitude of changes to central bank policy rates at future central bank meeting dates.

The app displays a probability distribution table containing all possible future values for the target rate at each meeting date.

Calculating probabilities based on expected effective rates has a good record for reliably predicting changes in central bank policy and managing interest rate risk.

Manage corporate treasury risk with a market-leading data and analytics software solution.

What is the macroeconomic outlook for 2022?

In this article, we analyse the macroeconomic landscape, noting the looming shadow of inflation, the overvaluation of equities, the continued growth in real estate, and the prospects for the U.S. dollar against the euro and the yen. Explore what’s in store for 2022.

News in Charts: Rising inflation risks

Headline consumer price inflation has continued to soar in the major economies, reaching 7 percent in the U.S., 5 percent in the euro area and 5.1 percent in the UK on the latest numbers.

The U.S. reading was the highest since June 1982, while the euro area’s was the highest since the beginning of the single currency in 1999. More inflation analysis here.

London Stock Exchange 2021 Debt Capital Markets Review

The London Stock Exchange is pleased to share its 2021 Debt Capital Markets Review.

Key highlights include: Global Trends in the Debt Capital Markets – over £515 billion on London Stock Exchange’s markets through a wide range of global borrowers; The Prospectus Exemption for Sovereign, Supranational and Local Authority issuers; further enhancements to London Stock Exchange’s DCM offering that now include the world’s leading ESG database covering scores and rankings of over 10,000 companies; and a core focus on sustainable finance with a record year for the London Stock Exchange’s Sustainable Bond Market and the launch of our Voluntary Carbon Markets solution. Download the report.

FX and risk markets – TreasuryToday Masterclass Series

Corporate treasurers now depend on the electronification of trading operations, such as foreign exchange and leveraging digital channels in order to become more resilient to shocks as well as being able to manage workflow remotely. FX electronification must be underpinned by sound data.

Log-in or register at TreasuryToday to find out how this manifests in practice.

Perish the thought – stock markets might fall

Mike Dolan, editor-at-large for finance and markets at Reuters News, warns that everything may not be plain sailing for the stock markets in 2022. He analyses why headwinds such as inflation, resurgent pandemic and geopolitics could derail momentum in equities. Read on.

Refinitiv Corporate Treasury Newsbeat

  • Olea, Refinitiv and Seabridge TFX join forces to tackle trade finance gap | Olea, Refinitiv and Seabridge TFX have enter Memorandum of Understanding to transform trade finance by offering a range of short-term trade finance solutions for suppliers dealing with large buyers. The aim is to drive transparency and efficiency in trade and supply chain financing for investors through risk assessment and management solutions such as workflow digitisation and data analytics, with the ultimate objective of benefitting SMEs with access to timely and cost-competitive financing. Read more.
  • Refinitiv responds to white paper by the Canadian Alternative Reference Rate Working Group regarding CDOR | Refinitiv acknowledges and responds to the white paper issued by the Canadian Alternative Reference Rate Working Group (CARR) regarding the future of the Canadian Dollar Offered Rate (CDOR) benchmark. Refinitiv has been engaged with CARR and is fully informed on their review of CDOR. Read more.
  • Refinitiv to cease Tokyo Swap Rate (for swaps referencing 6-month JPY interbank offered rates from London banks) and launch regulated Tokyo Swap Rate Fallback | Refinitiv has announced that it will cease the publication of both morning and afternoon settings of Tokyo Swap Rate (for swaps referencing 6-month JPY interbank offered rates from London banks), for all tenors via all delivery channels. Read more.
  • LSEG delivers streamlined and faster FX OTC trade clearing with launch of FXall connectivity to LCH ForexClear | FXall has expanded FX traders’ access to cleared workflows for FX OTC trades by building connectivity to LCH ForexClear from Settlement Center, FXall’s post-trade processing platform. This change gives FXall users a streamlined and quicker way of clearing NDF trades through LCH ForexClear. Read more.

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What is the outllokf ro inflation in 2022

while inflation rates climb, interest rates are likely to climb, too.