U.S. investors grappling with the latest stock volatility and evidence of inflation say they have been positioning themselves for more unexpected kinks in the road to recovery.
The moves to hold assets that could withstand a prolonged surge in inflation come as data earlier in the week showed U.S. consumer prices rose by the largest amount in 12 years in April in a jump that was well above Wall Street’s expectations. Bottlenecks in global supply chains and scarcity in the labor market were among the reasons for the surge in prices, Labor Department data showed.
Another wrinkle for investors trying to navigate the economic reopening is the Federal Reserve, which expects a jump in inflation to be “transitory,” meaning it will be slower to raise interest rates in order to make up for persistently low inflation over the last decade. “What we’ve learned in the past 24 hours is that the amplitude of inflation is going to be more important than anyone realized and it’s too soon to tell how persistent it will be,” Bob Miller, head of Americas Fundamental Fixed Income at BlackRock, said on Thursday. “That will be the debate over the summer.”
