How hot is the inflation pot? Strategies to protect portfolios from inflation risk

As the global economy emerges from its worst slump since the 1930s, we envisage plenty of inflation fertilisers at stake, especially in the United States. Inflationary trends could emerge due to a combination of factors, including the cyclical recovery as countries try to get the pandemic under control and gradually lift mitigation measures.

This will come at the same time as a super-sized US fiscal stimulus, thanks to the recently-passed $1.9tn fiscal package, which includes $1,400 direct payments to US citizens earning $75,000 a year or less, which will be disbursed quickly. The cheques could result in a big boost to consumer spending as early as April and could equate to the unfolding of huge pockets of pent-up demand in those sectors which have been hit the most by lockdowns. 

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