What happens to inflation after the epidemic ends?

By 18/03/2020News
Morning Stock News

Gold   1513,15

EURUSD   1,1026
( +0,10%)

DJIA   20158,50

OIL.WTI  26,875

DAX   8869
(+ 0,05%)

Nobody has thought about this question yet, but it’s time! Not a day goes by without new cash injections into the economy and markets. On Tuesday afternoon, the U.S. announced that it would buy back commercial papers from the market for $1 trillion and help the population for $850 billion. All this happens against the background of a huge drop in production and asset prices. Naturally, there is an idea that immediately after the end of the pandemic, prices for everything will start to rise. And right now, the price of food will start to rise.

AUD/USD chart of the day

AUD-USD chart of the day


However, the decisions made in the USA gave the market a little rest. Stock indices are growing synchronously. The main question is, how long will the optimism last? Fundamentally, the situation just keeps getting worse.


Against the background of falling stock markets no one paid attention to the extremely significant event. Above we see the AUD/USD monthly chart. Against the background of the October 2008 crisis, the pair dropped to the level of 0.60, but failed to break it down, and went up, almost doubling in a few years. On Tuesday, the bears did what they failed to do 12 years ago. The 0.60 was broken through. The previous long-term lows were as early as 0.477 in 2000.


As we noted yesterday, Bitcoin continues to feel very confident. For a better understanding of the situation, let’s compare the gold market worth $7 trillion with BTC’s market capitalization, which is currently less than $100 billion. In theory, one large fund can buy back all existing Bitcoin on the planet. Of course, this will not work in reality, as the price will start to rise rapidly.That is why, thanks to the inflation-free model, BTC is much more attractive for long-term investments than yellow metal.

What is waiting for us today?

11.00 EU basic consumer price index for February
14.30 Canada’s basic consumer price index for February
15.30 U.S. weekly change in oil product stocks

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.