Monthly Archives: July 2013

Is Inflation Really Gone Forever? 29 July 2013

In 2011, inflation in the US was expected to reach 2.4% by 2013, according to consensus estimates. But since then, consensus expectations for 2013 consumer price inflation in the US have fallen by nearly 100 basis points (b.p.) to 1.5%, with a third of the drop coming in the past three months. Similar trends have unfolded in China, with inflation expectations for 2013 dropping by 150 b.p. from peaks two years ago.

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Rising Rates: Time to Position, Not Panic – 15 July 2013

During May and June, the 10-year US Treasury yield soared by nearly one percent, and markets reeled. Instead of panicking, investors should make sure their portfolios are positioned effectively.

Even with the Fed planning to keep short-term rates nailed down for a while, our forecast is for generally higher rates ahead. While there won’t necessarily be a big leap like the one in the second quarter, investors should be positioning their bond portfolios for the reality of higher rates.

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