- Rising inflation expectations are becoming a key discussion point in 2021. Rates were already on an upward trajectory in Q4, but recent developments fast-tracked those concerns in the new year.
- For investors, the key question is whether rising inflation expectations actually materialize in the economy.
- If inflation were to materialize, it could have a significantly negative impact on fixed income investments by lowering real returns.
- The sweet spot may be in allocating to asset classes that feature both low duration and high yield.
For further details see:
Income Monitor: Q4 2020 - Time To Prepare For Inflation?