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

Key Takeaways

  • The consensus trade expects inflation, but much of this may already be priced in, creating potential opportunities in medium-term bond yields if inflation proves transitory.
  • An excess of private savings before COVID-19 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 behavior toward taking on more debt – yet credit demand remains soft and markets seem to be ignoring weaker data in China.