Fixed income in a rising inflation environment

10 min read 25 Mar 21

An update from M&G Public Fixed Income looking at fixed income investing in a rising inflation environment:

  • The prospect of higher inflation and what this means for financial markets has become a key area of focus for investors in recent months. Some factors could indeed push inflation higher, in our view, in particular the unprecedented levels of fiscal and monetary stimulus, combined with the release of pent-up demand as the global economy reopens.
  • Against this, we believe that some longer-term factors such as the potential long-term economic damage caused by the pandemic could see inflationary pressures subside as stimulus packages unwind.
  • While inflation is traditionally seen as negative for bonds, we outline a number of fixed income strategies and instruments that we believe could offer protection or potentially even benefit during a period of rising inflation.

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By M&G Investments

The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested.

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