A lively discussion that goes against consensus, seeking to unearth the truth about what is really happening in the economy and the potential impact on bond markets.

Join Adam Hetts as he speaks with Jenna Barnard and John Pattullo, Co-Heads of Strategic Fixed Income, about whether there is substance to the reflation trade.

Key Takeaways

  • It has become a consensus trade to expect inflation but much of this may already be priced in, creating potential opportunities in medium-term bond yields if inflation proves transitory
  • There was an excess of private savings before COVID-19 that required governments to spend to balance private sector saving. In some ways today’s fiscal stimulus is an extension of the response to the deleveraging environment that lingered after the Global Financial Crisis
  • For reflation to be convincing we need to see evidence that households and businesses are changing their behaviour towards taking on more debt, yet credit demand remains soft and markets seem to be ignoring weaker data in China