Credit Suisse are among analysts associating higher inflation with rising stock prices, according to Bloomberg. The view is contrary to Leuthold Group who see an inverse relationship between inflation and stock prices.

average daily returns on days when inflation expectations rise
  • Led by strategist Jonathan Golub, Credit Suisse analysts say that rising consumer price expectations, as measured by 5-year break-even rate, coincide with higher returns for stocks.
  • Credit Suisse analysts point out that every sector in the S&P 500 tends to gain when inflation concerns intensify, with financials and energy leading.
  • Leuthold analysts say equity investors feel too hot during periods of high inflation which has also been linked with lower equity valuations.
  • Contrary to their opinion, Leuthold holds that the inverse relationship between inflation and equity returns has weakened in the last two years
  • Leuthold says that given the current high stock valuations, any slight increase in inflation could trigger bearish moves.
  • Keith Lerner, chief strategist at Truist Advisory Services believes some inflation is good for the equity market but too much of it can raise concerns.

U.S inflation climbed 0.8% in April fueling inflationary concerns after rising 4.2% in 12 months, a record since September 2008.