(Bloomberg) -- The move away from globalization toward a more fragmented world is likely to fuel permanently higher inflation across regions, according to Apollo Global Management’s Torsten Slok.
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The chief economist at the firm said that the rising popularity of restrictive trade and anti-immigration policies indicate a shift in the geopolitical backdrop that is likely to fan global price pressures and weaken growth.
“We are turning toward a world with more segmentation,” he said in an interview on Bloomberg Television. Concerns around a “stagflationary shock” are the “backdrop for the conversation that we are having in markets at the moment,” he added.
Investors are racing to assess the ramifications of US President Donald Trump’s latest tariff announcements on asset prices. Global bond yields ticked higher on Thursday, led by the long end, amid concerns around rising government spending.
Slok’s remarks follow a note published yesterday in which he warned upward pressure on inflation in goods and labor markets will keep interest rates higher for longer. Still, he added in the interview the Federal Reserve may pivot its attention to growth, and away from inflation, if the economy begins to slow more rapidly.
“If growth does slow more meaningfully — if the unemployment rate begins to go up — I do think the Fed will begin to put more weight on growth risks,” he said.
A steep drop in a gauge of consumer confidence on Tuesday was the latest sign that the US economy is faltering, while a Citigroup Inc. index of US economic surprises declined to the lowest level since September. Traders are awaiting a revised fourth-quarter gross domestic product print later Thursday.
--With assistance from Nick Bartlett and Jonathan Ferro.
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