

Deconstructing Inflation
As the page turns to a new year and a new President, bond investors fear the return of inflation. Tight labor markets, expected fiscal stimulus, deficits, the pullback of monetary stimulus, and reduction by a primary holder of US Treasuries are bringing higher inflation expectations. After a thirty-five-year run for bonds, the cycle certainly seems long in the tooth. Nonetheless, proper positioning for higher inflation requires understanding the drivers of inflation; no matt