The Performance of “Deflation Asset” vs. “Inflation Assets” Interesting chart showing the performance of “Deflation Asset” vs. “Inflation Assets” since 1960. “Deflation Asset”: Government Bonds, US Investment Grade, S&P 500, US Consumer Discretionary, Growth and US High Yield “Inflation Assets”: TIPS, EAFE, US Banks, Value and Cash Picture source: BofA Merrill Lynch
Is Inflation Dead? Deflation Fears Make A Comeback Is deflation on the horizon? Investors expect inflation running below 1.5% YoY for the next three years. Picture source: Arbor Research & Trading
Growth and Inflation This chart shows the ISM Index vs. prices paid deviation from the mean since 2009. Currently, the U.S. manufacturing cycle has headed back into recession & deflation. Picture source: Fidelity Investments
Why Do Eurozone Bond Investors Accept Zero Long-Term Interest Rates? Because they have a deflationary view of the euro area economy. Now, investors are losing so much money just by holding German bonds in real terms (adjusted for inflation). Today, the Germany 10-Year bond yield hits 0% again. Keep in mind that raising interest rates in…
