Chart - Z1P, page-5830

It's not the rising interest rates that should be your primary concern.

Since the beginning of the year, it’s been notable that bond markets, both in the UK and in the US are starting to price the risk of higher inflation pressures, as long-term yields move to the upside on both sides of the Atlantic.

Last week US 10-year treasury yields jumped sharply higher to 1.36%, and have continued to do this morning, in a move that suggests that markets are starting to become increasingly concerned about long term inflation risk, while US 2-year yields remain stubbornly static at around 0.1%.

With prices paid data also showing signs of rising sharply, the move higher in yields, not only in the US, but also in the UK appears to be acting as a small headwind, and when combined with sharp rises in energy and commodity prices there is rising concern that higher prices will not only choke off any post pandemic recovery, due to higher borrowing costs, but they could also crimp future consumer spending due to higher living costs.

The big worry now is that any post pandemic recovery might lead to rising price pressures in areas that can least afford it

For months now I have been pointing towards the riding costs of basic materials in Oil, Lumber Copper et all, and this increases the cost of non discretionary spending.

This leaves very little for non discretionary spending on which BNPL is so heavily dependent.