SCHQ - Fixed Income Investment Outlook Q1 2021: Inflation Risk Reemerges
- With U.S. election uncertainty largely behind us and positive news about vaccines, better economic data and positive investor sentiment have flowed through to financial markets.
- However, with asset prices close to record highs and economic activity expected to accelerate sharply in 2021, we believe inflationary risk may be underestimated as we move into the next phase of recovery.
- With demand weak, one might assume that goods and commodities prices would remain muted. However, given the unique nature of the current environment, there are signs of an upward shift in consumer goods prices with recent changes in spending patterns.
- Another variable of importance for inflation rates globally will be exchange rates.
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Fixed Income Investment Outlook Q1 2021: Inflation Risk Reemerges