Nearly 40% chances of stagflation by end of 2026, traders say
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- Kalshi traders raised the probability of stagflation by the end of 2026 to nearly 40%, up from 11% three months earlier.
- Kalshi traders forecast a greater than 65% chance that inflation will reach at least 4.5% this year, far above FactSet’s 2.8% consensus.
- Bureau of Labor Statistics reported the Consumer Price Index rose 3.8% year‑on‑year in April, the strongest gain since May 2023, while the unemployment rate stayed at 4.3%.
- FactSet’s consensus outlook expects inflation to average 2.8% for the year, contrasting sharply with traders’ higher forecasts.
- Polymarket traders see a 22% chance of stagflation and a 32% chance of a soft landing as of Thursday.
Why it matters: Investors and corporate planners must factor a near‑40% stagflation risk and a 21% soft‑landing outlook, as the BLS’s 3.8% CPI and 4.3% unemployment tighten profit forecasts and pressure bond yields.
