Amidst the uncertainty surrounding the current macro environment (thus affecting the crypto market), we received some positive macro news last week – supply chain issues may finally be resolved!
Global supply chain disruptions due to the COVID pandemic have been a major contributor to persistently high inflation. There are two key barometers that show the extent to which supply chains are being disrupted – the percentage of respondents in the ISM report reporting slower delivery times from suppliers and global shipping prices.
Last week it was reported that 19.6% of respondents to the ISM report reported slower delivery times from suppliers, a significant drop from the drastic 70-80% levels we experienced during the pandemic.
The fact that this indicator has fallen to normal levels is encouraging and suggests that the temporary supply chain-driven inflation that has accumulated over the past 18-24 months has now been eradicated. Hence, we should see commodity prices start ticking down in the inflation reports in the coming months.
That doesn’t mean the Federal Reserve’s job is done, however, and it will soon turn around as inflation in services inflation is still high. We know there is high demand in the job market, as Friday’s report shows US job openings per unemployed worker are 2.5 standard deviations above the pre-pandemic trend.
In summary, the Federal Reserve still has work to do. Still, the data on potentially resolved supply chain disruptions gives optimism for long-term investors in the current climate. I think next week’s US CPI report on September 13th will be a critical event for us Bitcoin BTC/USD Alts and stocks and signal how much work the Federal Reserve has left.
