The FT reports today that break-even inflation rates are rising in interest rate markets as investors start to worry about budding inflation pressures partly arising as a result of ZIRP settings by developed world central banks. Just as telling, noted bell-cows Bill Gross and Jim Rogers are getting uber hawkish. I have personally been a global inflation hawk for around a year now. Australia's next big inflation test comes on Tuesday, and god help us if core CPI prints high--the market is just not ready for it:
""Why would you want to be a bondholder with bond yields so low and that sort of inflationary trend,” Bill Gross, who runs the world’s largest bond fund at Pimco, told the Financial Times. “If CPI continues above 3 per cent in the UK and 2 per cent in the US, then we are accepting negative real interest rates and that is not an attractive investment.”
Jim Rogers, the veteran investor based in Singapore, said western governments were concealing the extent of inflation, leading him to avoid bonds and continue his long-held preference for commodities. “There has been inflation but the US and UK governments lie about it ... Money all around the world is becoming more and more debased so you need to own real assets.”"
