Key points

  • Economies continue to be governed by the virus. The US grew in the first quarter after a swift easing in restrictions, China slowed and Europe and Japan both saw contractions.
  • Inflation has picked up in many areas, reflecting base effects, commodity prices and bottlenecks. The pick-up should prove temporary. We expect inflation to return below target in most developed economies. US inflation is likely more persistent. Some emerging markets may also see pressure.
  • Developed market central banks will look through the temporary inflation spike but will monitor inflation expectation developments closely.
  • Despite widespread expectations for an inflation easing, against potent fiscal and monetary stimulus, bonds are susceptible to a sudden adjustment in Fed expectations.
  • Rising real rates should also support USD vs low-yielder crosses.

This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities. 

It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date. 
All information in this document is established on data made public by official providers of economic and market statistics. AXA Investment Managers disclaims any and all liability relating to a decision based on or for reliance on this document. All exhibits included in this document, unless stated otherwise, are as of the publication date of this document. 
Furthermore, due to the subjective nature of these opinions and analysis, these data, projections, forecasts, anticipations, hypothesis, etc. are not necessary used or followed by AXA IM’s portfolio management teams or its affiliates, who may act based on their own opinions. Any reproduction of this information, in whole or in part is, unless otherwise authorised by AXA IM, prohibited.