What does the rise in inflation mean for banks?
The recent jump in bond yields is reminiscent of the 1970s. Banks have outperformed, but what do we need to see a sustained reflation rotation in t...
Jan 25, 2021
A change in the low-inflation regime that has characterised the last decade would have profound implications for investors. In this paper, Ninety One’s Investment Institute explores what past periods of sustained price rises tell us about the inflation outlook now, and argues that inflationary pressures are building, especially in the US. A rerun of the 1970s seems unlikely. But in the wake of the pandemic, investors shouldn’t bank on a repeat of the super-low inflation that followed the Global Financial Crisis. Conditions now are fundamentally different, which could lead to a different inflation outcome.
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