Inflation Phases: From Deflation Repair To Inflation Despair

In a new note out of Goldman’s Christian Mueller-Glissmann, the strategist looks at the impact of inflation on balanced portfolios, and writes that even as US inflation expectations have fully recovered and investors are moving from fading deflation risk to pricing an inflation overshoot (which in moderation is good since “higher inflation matters critically for balanced portfolios, which tend to perform best when growth accelerates but inflation pressures are limited”) so far the rise in inflation expectations “has not been a headwind for 60/40 portfolios as investors mostly faded deflation risk”.