Morgan Stanley: We Are On The Brink Of An Inflation Deluge


Photo: Morgan Stanley

Bernanke is fighting deflation, but the inflation threat looms large over global markets. Last week, China expressed sincere worries its inflation situation was getting out of control, and it would need to take steps to tighten. The Shanghai Composite plummeted the next day.But does the rest of the world have to worry about inflation?

From the looks of it, not yet. Emerging markets have been experiencing ample inflation, but the west still lags behind. Expectations are rising however, and investors may be readying for the scenario.

Morgan Stanley have the visual breakdown of why we’re expecting an inflation deluge, and what it means for markets.

Emerging markets are experiencing a boom in inflation.

But China isn't in the lead, India has the biggest problem right now.

But it's not just the BRICs involved; major Western economies also face the inflation threat.

Long-term inflation expectations rising.

And the U.S. consumer sees it too.

But right now, those bond market and consumer expectations aren't being seen.

So why are we feeling the inflation pinch? Food prices are hitting emerging markets first.

And commodity prices are soaring.

Inflation is being pushed up in the U.S. by the prices companies are paying for commodity inputs.

But is this going to hurt business? Not necessarily...

In fact, businesses in Europe are more confident in the future.

And it might lead to a switch from bonds to stocks as investors seek a means to beat inflation.

But will the U.S. really experience this inflation deluge?

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