Inflation continues to be front and centre of investor minds with many still unsure about where it might land over the next six to 12 months. One thing for sure is the debate around whether the current bout in inflation is transitory in nature is dead.
While inflation is trending down globally it has been much sticker than anticipated, with many commentators noting we could be in for a period of structurally high inflation for longer.
Having peaked at 9.1% in June last year, the inflation rate in the US came in at 4% for May. Despite this, labour markets in the US have remained hot, with the US adding 339,000 jobs in May versus estimates of 195,000, increasing the risk of a resurgence in inflation, meaning non-farm payrolls have exceeded estimates for 13 out of the last 14 occasions.
Fisch Asset Management predicts some of the base effects which have seen inflation fall faster in recent months will disappear from mid-year, with rental prices in the US likely to “consolidate or raise inflation rates” in H2.
Even with inflation set to decrease further over the short to medium term, with much uncertainty across the macro backdrop, the Federal Reserve’s 2% target looks out of reach.
In addition, several megatrends are emerging that dominate geopolitical discourse. With this in mind, ETF Stream assesses five thematic ETFs that could benefit from structurally higher inflation...