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By Franz Wenzel, Institutional Solutions Strategist at AXA Investment Managers (AXA IM)
"What was bound to happen finally happened. After years of unseen reflation policies around the world inflation started to swing higher. In particular US spot and forward inflation indicators swung higher post the presidential elections in anticipation of additional fiscal support while a weakening currency pushed UK inflation higher to 1.8% and potentially even rising higher over the coming months.
Higher commodity prices helped to lift European inflation metrics. One might argue this is mainly a cyclical phenomenon. Agreed, cyclical forces are at work, yet we think it would be unwise to ignore the slow-motion mechanics of the output gaps which are...
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