Markets fret over growth and inflation as tech rout gains speed
SPY•Global markets are weighing slower growth against persistent inflation, with oil down 15% this week but still up 64% this year. Rising government borrowing costs and a sharp Nasdaq selloff are adding to concerns about tighter financial conditions.
1. Inflation pressures persist
High energy and food prices are keeping inflation concerns elevated even as growth outlooks weaken. Oil has fallen 15% this week to just below $100 a barrel, but remains up 64% this year; the UN Food and Agriculture Organization’s Food Price Index is at its highest level in nearly four years. US one-year inflation expectations edged up to 4.7% in October from 4.6% in September.
2. Borrowing costs rise
US government borrowing costs rose 85 basis points in the third quarter, while costs in France and Italy increased by more than 100 basis points. Yields have eased since then but remain sharply higher this year. ECB estimates showed the latest rise in bond yields would reduce cumulative economic growth in 2027-28 by 100 basis points compared with September projections.
3. Tech selloff adds pressure
The Nasdaq recorded its biggest one-day drop since April 2025 on Thursday, wiping trillions of dollars from its market value as investors questioned the strength of the AI boom. Further declines could erode household wealth, raise corporate funding costs and curb risk appetite. Euro zone growth slowed sharply in October, while US growth remained resilient, supported in part by investment in AI infrastructure.
