The reflation trade has further to run

Investors have piled into assets that stand to gain from a global recovery. And while there may be little evidence of inflation as yet, it will come; the only question is how high it will go.

Aerial view of Shanghai © iStockPhotos
China’s annual rate of core inflation has turned negative for the first time since 2009
(Image credit: Aerial view of Shanghai © iStockPhotos)

Inflation or deflation? Investors have spent the last few months piling into assets that stand to gain from a vaccine-enabled global recovery. “Frothing” commodity prices should bring higher inflation, but signs remain scant in official figures, says Albert Edwards of Société Générale. US core consumer price index (CPI) inflation, which strips out volatile food and energy prices, came in at 0% in January compared to a month before. In China, year-on-year core CPI slipped into outright deflation for the first time since 2009. “The global reflation trade may well have got ahead of itself.”

Inflation is coming

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Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.