Inflation | Market Currents

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As economic reopening continues and supply-demand imbalances lead to price increases, investors are understandably fixated on the future path of interest rates — a key driver of future growth and returns. But in this particularly unusual period of economic history, what will the Fed do?

Many believe higher inflation is transitory and that the Fed should wait it out. Others argue that it should take action now to get ahead of a potential problem in the future.

In this episode, Colin Robertson, Northern Trust Asset Management’s head of fixed income, weighs in on this debate. To do so, he provides historical context, interprets Fedspeak and illuminates the economic and policy dynamics that will drive interest rates going forward.

Colin discusses:

The drivers of low interest rates since the financial crisis
Noise versus signal related to predicting future monetary policy
The current and most likely future shape of the yield curve
Northern Trust’s outlook for total bond returns
The merits of owning bond funds versus individual bonds
And more

About Our Guest:

Colin Robertson is an executive vice president and head of fixed income for Northern Trust Asset Management. This role includes overseeing fixed income investments for individual and institutional investment management accounts at Northern Trust, Northern Funds and Northern Institutional Funds. Through his leadership managing interest-rate-sensitive and credit-sensitive fixed income portfolios, Northern Trust has built a world-class fixed income team, investment process and products.

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Summary:

Concerns about inflation have filled financial headlines recently as U.S. consumers reemerge from their homes and take note of higher prices and supply shortages in certain areas of the economy. But will higher inflation last? Or will it quickly revert back to more modest levels seen in recent decades?

In this episode, Northern Trust’s Katie Nixon is joined by Chief Economist Carl Tannenbaum to sort through this important topic, which has significant implications for the economy, markets and investors’ portfolios.

Carl discusses:

What’s at stake when it comes to inflation — why containing inflation is important in the first place
The two broad categories of inflationary forces: cyclical and secular
The drivers of recent spikes in consumer and producer prices
Why housing market inflation bears watching over the coming months
Northern Trust’s near- and longer-term outlook for inflation
And more

Related Insights:

About Guest:

Carl Tannenbaum is a chief economist at Northern Trust. In this role, Carl briefs clients and colleagues on the economy and business conditions, prepares the bank’s official economic outlook and participates in forecast surveys. He is a member of Northern Trust’s investment policy committee, capital committee and asset/liability management committee. Prior to working at Northern Trust, Carl spent four years leading the Federal Reserve’s risk section and was deeply involved in the central bank’s response to the 2008 financial crisis.

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Tag Archives: Inflation

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