Investors in the US and Europe have been spoiled by two decades of low and stable inflation, and that perhaps explains why the inflation numbers from last year were not taken as seriously as they should have been. As the excuses (COVID recovery, strained supply chains) made for the inflation surge have worn thin, we are waking up to the reality that this may not be a transient phenomenon. In this session, I look at how inflation is measured and how every measure showed inflation rising in 2021 and then at how interest rates and inflation are intertwined. I also break down inflation into its expected and unexpected components, and estimate how different asset classes perform when inflation is much greater or much lower than expected. Finally, I look at how inflation differences across countries play out in interest rate differences across currencies and drive exchange rates.
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Slides: [ Ссылка ]
Blog Post: [ Ссылка ]
Data Links
Inflation Data: [ Ссылка ]
Intrinsic versus Actual T.Bond Rates from 1954-2021: [ Ссылка ]
Inflation and Returns on Asset Classes: [ Ссылка ]
Riskfree Rates in Currencies (Government Bond based estimates): [ Ссылка ]

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