Inflation Protected
Our Portfolio Allocation Summary for April 2024.
In this Insight, we continue our series of reports outlining investment frameworks for inflation-linked bonds in the developed markets, this time focusing on Japan. Our Japanese Inflation-Linked Golden Rule suggests that investors should overweight Japanese inflation-linked bonds versus nominal JGBs on a strategic (6-12 month) investment horizon. Our new Japanese inflation models suggest that there is a material risk that Japanese inflation exceeds the current level of market-based inflation expectations over the next year.
Our Portfolio Allocation Summary for March 2024.
In this Special Report, we introduce our UK Linkers Golden Rule – a framework to profitably trade and invest in UK inflation-linked bonds versus nominal UK gilts. The Rule is currently signaling that nominal Gilts should outperform UK linkers over the next year as UK inflation slows.
Could a second wave of global inflation be underway? The latest inflation prints in the US and UK showed upside surprises, while there is evidence of increased price pressures in global manufacturing. Combined with the improvements seen in economic sentiment measures and leading economic indicators in the US and Europe, and potential upside risks to oil prices, we see a strong case for owning more inflation protection in global bond portfolios. Inflation-linked bonds look attractive in this environment, especially in the US.
