Inflation expectations remain anchored

En bref

The spike in long-term interest rates has been to a large extent driven by fears that the combination of a large fiscal US stimulus and ongoing money printing will trigger a permanent increase in inflation.

Highlights:

  • The sharp and quick repricing of inflation expectations and risk has been a key driver of bond yields globally. This mainly reflects uncertainty over the impact of the reopening of the economy and an aggressive policy-mix. Once risk premia are stripped out, long term expectations are back at the pre-crisis level, but well below the levels prevailing before 2015.
  • In the US, the spike is concentrated in the short term, and shows few signs of loss of faith in the Fed’s long-term inflation target, despite the tolerance towards higher inflation within its new framework.
  • The latest uptick in euro area inflation expectations is in line with fundamentals. They have potential to gradually rise further as the economy recovers and the ECB remains determined to lift inflation towards the 2% target.
  • On financial markets we see less leeway for US inflation expectations (already elevated) to rise sustainably but longer-dated euro area inflation linked bonds are more attractive as inflation risks are still not priced adequately.

Download the full publication below

Focal Point ǀ Inflation expectations re-main anchored
PDF
Picture

© Generali Investments, tous droits réservés. Ce site internet est publié par Generali Investments et est considéré comme une communication marketing et une promotion financière liée aux produits et services des sociétés du groupe Generali suivantes : Generali Asset Management S.p.A. Società di gestione del risparmio, Generali Investments Luxembourg S.A. et Generali Investments Holding S.p.A. (ci-après dénommées ensemble Generali Investments). En outre, le site peut contenir des communications de marketing et de promotion financière de produits et services de sociétés faisant partie de la plate-forme Multi-Boutiques coordonnée par Generali Asset Management S.p.A. Società di gestione del risparmio, et en particulier de Infranity, Sycomore Asset Management, Aperture Investors LLC, Plenisfer Investments SGR, Lumyna Investments, Sosteneo Infrastructure Partners SGR et Generali Real Estate S.p.A. Società di Gestione del Risparmio.