Inflation is the spectre of financial investors. Especially those who earn their bread in the bond market can remember earlier crash phases that wiped out the price gains of many years in a short period of time. These price slumps were actually always triggered by interest rate hikes by central banks, which in turn reacted to rising inflation rates or expectations.
Today, we live in times of extremely low interest rates, and monetary policy is more expansive than ever before. Fresh liquidity, which the central banks pump into the markets to support prices, creates an extreme environment. Investors are looking for returns, and they are increasingly difficult to find. Bond market, stock market, real estate, precious metals – wherever you look, prices are extremely high. The greatest danger would be an end to the expansive monetary policy and a switch by the central banks to a restrictive course.
This could probably only be triggered by a sudden and sustained rise in inflation rates. So far, this rise is not in sight, and even the somewhat surprising July figures do not cause any uncertainty. They can be explained by special factors such as the postponed summer sales and do not represent a turnaround. But carelessness should not spread among investors. After all, there was no trend on the financial markets that would have lasted forever.