According to Odaily, as bond traders grow increasingly confident that inflation is finally under control, a group of investors is quietly establishing defensive positions to guard against potential future inflation spikes. These fund managers are positioning themselves to cushion fixed-income returns in the event of an inflation shock. Wall Street strategists also recommend taking advantage of the decline in market-based future inflation indicators to build defensive positions. With interest rate cuts now inevitable, economic recession has replaced inflation as the primary concern.
Some investors claim that this optimistic news has driven benchmark bond yields significantly lower, but others believe the decline may be excessive. 'We think concerns about a recession are somewhat overblown, but at current yield levels, inflation risks may be underestimated,' said John Bilton, Head of Multi-Asset Strategy at Morgan Asset Management. Bilton noted that given 'some factors could push inflation higher,' it is advisable to maintain a 'roughly neutral' stance on duration or interest rate risk exposure.