In this commentary we discuss:
- Greater political uncertainty in the US, and well as Europe, suggests higher volatility and risk premia across asset classes.
- We are skeptical that the Trump administration’s policies will lead to higher trend growth, and the thrust of trade, immigration and fiscal policies increases risks of higher inflation.
- Not surprisingly, breakeven inflation rates (BEI) have risen since the election. Still, BEIs can serve as a source of relatively cheap insurance against inflationary policies.
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