Midweek Musings – it has come to pass?

I refer to the sharp sell off and loss of confidence in fixed income markets that I have been predicting for a long time would be the certain result of an eventual end to near zero interest rates, plus a realisation that if there is going to be inflation, one has to own ‘real’ assets, like global equities.

The latter asset class may suffer if central banks trigger recessions by misjudging the pace of rate rises, but at the moment, the relatively hawkish approach we are seeing suggests to markets that the top economists are confident in the strength of labour markets and consumer demand and see their priority as holding back inflation. Stagflation is no doubt a risk, but markets are not seeing things that way.