Deutsche Bank strategist warns markets underpricing rate hikes amid sticky inflation

Deutsche Bank strategist Henry Allen argues investors are underestimating the scale of interest rate hikes needed to curb inflation, citing a 'fundamental disconnect' between limited Fed/ECB hike expectations and rising price pressures. The ISM Services Index shows input price growth at post-pandemic highs, suggesting inflation may persist. This challenges market pricing of a shallow tightening cycle, implying potential repricing in rates and risk assets.