Stagflation expectations jumped to 66 per cent, the highest since 2008
Money managers are increasingly prepping for bad economic news, and nowhere more so than in Europe, belying hopes coming into this year that the region will outperform the U.S. Amundi SA is prepping for a possible downturn in the continent, Abrdn PLC is long the U.S. dollar against the euro and Vanguard Group Inc. is touting liquidity hedges.Article content
But one thing’s for sure: If newbie traders have limited real-world experience with inflation, fewer still can recall a world of runaway prices just as growth tanks. James Athey is a London-based investment director at Abrdn, which oversees around 542 billion pounds in assets. The 42-year-old is short the euro and the U.K. pound.
“We advocate positioning for the high likelihood of stagflation in developed markets, with a base case of recession in Europe. Stagflation presents a challenge, but there are some areas within fixed income that we think will be better protected from rising rates and slowing growth.
“There’s lot of volatility in the interest-rate market. Meanwhile, credit markets have been reasonably well behaved. We’ve seen new issues coming to the market with interesting premiums and I think that’s a trend that will continue to see periodically for the rest of the year. ”Article content
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