Q: PIMCO and Blackrock have recently suggested buying inflation-protected bonds. Do you see any risks that US inflation could surprise to the upside this year or next? What would be the flow on effects to rates and the global economy?

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In this Collection... First published on 13th Apr 2016

Inflation is again beginning to worry some professionals after years of deflationary fears. PIMCO and Blackrock both warned investors to seek inflation protection in March, according to a Bloomberg report. Fidelity joined the party in recent days, warning investors that inflation was stirring in the US. It’s not just the US either, overnight the UK figures showed higher than expected core inflation at 1.5% for March, though this is still below the Bank of England’s 2% target. As of March, the spread between nominal 10-year treasuries and US 10-year inflation protected bonds is suggesting a breakeven inflation rate of 1.58%. This is well below the core inflation rate of 2.33% p.a. in February. Core inflation excludes food and energy, but with oil prices stabilising, headline inflation could follow. To help Livewire readers stay ahead of the trends, we asked some of our regular contributors for their view on the inflation outlook. Responses come from ABC Bullion, Aimed Capital, BetaShares, Saxo Capital Markets and Spectrum Asset Management.