The market expects the Fed to take tougher measures to reduce bond purchases and raise interest rates.

In recent months, the performance of US macroeconomic data has been generally disappointing.

This pushed GDP growth expectations to rock bottom. On Tuesday, the Atlanta Fed's GDPNOW model predicted US GDP growth of just 0.5 per cent.

At the same time, the market expects the Fed to take tougher measures to reduce bond purchases and raise interest rates.

The above situation superimposed soaring "non-temporary" price changes, everything seems to point to "stagflation."

Charlie McElligott, an analyst at Nomura Securities, points out that the situation does not seem to improve any time soon, as their economic quadrant study foundA critical "phase shift" is taking place in real time.

By the end of last week, the economy had entered the "slowdown" quadrant and stepped out of the traditional "expansion" phase for the first time since June 2018.

This is also confirmed by the weekly actual GDP tracking of Nomura's American economic team, which shows that the economy has slowed significantly after rapid growth.

This has a significant impact on stock returns.According to McElligott's review of cases that have previously entered the "slowdown" phase, there are some counterintuitive results-because "value" (cyclical and defensive value) is related to "growth" and other factors (momentum, crowding, low risk, scale). However, 10-year Treasury yield sensitivity and WTI crude oil sensitivity have actually lagged behind, which has something to do with bullish "value" trading behavior.It's a startling contrast.……

MacEllligott pointed out that inflation spasms caused by such a large supply chain have never been seen in the time frame back to 2000, but if the so-called "economic slowdown" remains unchanged, it is likely to increase volatility in the coming months.The Fed is now desperate.