Vaccines are rolling out, restrictions are easing and economies are gearing up. But if there is a fly in the ointment of this emergence from the long, cold winter of COVID-19, it’s inflation, or more accurately at this point, the fear of inflation.
“We believe that U.S. inflation worries and the rise in U.S. bond yields will continue to be the hot potato topics for the financial market for the rest of this year, with spillover consequences to other asset classes and markets,” said UOB Global Economics and Research.Nigel Green, chief executive of deVere Group, argues that the biggest fear is fear itself and “longer-term inflation fears … are premature and are being overplayed.
Strategists at BofA Global Research argue that the world is at a secular turning point for both inflation and interest rates. BofA’s secular case for inflation is driven by new mandates from central banks targeting higher inflation, epic fiscal stimulus that may extend beyond the immediate threat of COVID and shrinking globalization.