Economic Shifts Highlight Structural Changes in Global Markets

According to Foresight News, the global financial landscape is undergoing significant structural changes, driven by liquidity expansion and persistent structural inflation. Despite high policy rates, they remain below the threshold for economic tightening. The market is pricing in a soft landing, transitioning from speculative expansion to structural integration. The Token2049 Singapore conference marks a pivotal shift from narrative-driven liquidity to income-supported yield data. Key market changes include the dominance of perpetual decentralized exchanges, the rise of prediction markets as functional derivatives, and the expansion of AI-related protocols with real Web2 applications. Liquidity decentralization is evident, with repledging and DAT reaching their peak. Three structural drivers are influencing the macroeconomic framework: currency devaluation, demographic shifts, and liquidity pipelines. Asset inflation reflects currency devaluation rather than organic growth, with long-duration assets outperforming during liquidity expansion and leverage compressing during contraction. Recession risks are highlighted by lagging indicators such as CPI and unemployment rates, which confirm economic downturns post-factum. The U.S. is in a late economic cycle rather than a recession, with a higher likelihood of a soft landing. Leading indicators include an inverted yield curve and controlled credit spreads, suggesting no imminent systemic stress. The labor market is gradually cooling, maintaining tight employment conditions. Inflation dynamics present a "last mile" challenge, with commodity disinflation complete and service inflation anchoring overall CPI near 3%. This phase is the most complex since the 1980s, with wage growth near 4% sustaining high service inflation. Housing inflation lags in measurement, though real market rents have cooled. Policy implications for the Federal Reserve involve balancing credibility with growth. Premature rate cuts risk reigniting inflation, while prolonged maintenance risks excessive tightening. The equilibrium outcome suggests a new inflation baseline closer to 3% rather than 2%. Long-term inflation anchors include deglobalization, which increases transition costs through supply chain diversification; energy transitions, which raise short-term input costs due to capital-intensive low-carbon activities; and demographic shifts, which create structural labor shortages and persistent wage rigidity. These factors limit the Federal Reserve's ability to normalize without higher nominal growth or equilibrium inflation.