October 20, 2021

Stocks and bonds struggle under stagflation threat

LONDON, Oct 12 (Reuters) – Signs that soaring energy prices are putting a dampener on economic growth kept a lid on global stock market gains on Tuesday, while inflation and policy-tightening fears sent short-dated U.S. Treasury yields to 18-month highs.

Oil prices rose further, with Brent crude above $84 a barrel . Coal has scaled record peaks and, while gas prices are off recent highs, they remain four times higher in Europe than at the start of the year.

The impact of supply crunches in power and manufacturing components is showing up in data – figures on Tuesday showed Japanese wholesale inflation hit 13-year highs last month, British shoppers slashed spending, China recorded a 20% drop in car sales and bottlenecks dragged German economic sentiment down for a fifth month.

Stock markets were trying to claw back earlier hefty losses, with a pan-European equity index (.STOXX) only…

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