Global Matters Weekly – 2 November 2020

Inflated expectations?
by Stephen Nguyen, CFA

It has been one of the main discussion points of the past three years, five years and even decades in the case of Japan: will inflation return? Low prices and ultra-low rates must surely end at some point; or maybe not… We are amid a pandemic and going through a period of depressed economic activity, so why would inflation even register on investors’ radars? As an asset allocator, it is imperative we consider what might happen to inflation and inflation expectations in the coming years in order to effectively build robust portfolios for our clients.

Market Snapshot

  • Global equities fell -5.6% on the week as the number of Covid-19 cases surged in Europe and the US
  • The US economy expanded at a record 33.1% annualised rate in Q3, which beat market expectations
  • Brent crude fell -10.3% ending the week at $37.5 a barrel
  • Gold fell -1.2% to end the week at $1878.8 an ounce