Economist and fund manager John Hussman says inflation will be huge.
"It should not escape investors that the rapid expansion of deficits during the 1970s and into the early 1980s was accompanied by a hostile inflation climate, while the fiscal discipline of the 1990s produced a very pleasant period of low inflation pressures," Hussman writes in a note to investors.
Hussman’s near-term concern continues to be the risk of fresh credit strains, the likely outcome of which he feels will be a flight-to-safety toward default-free Treasury securities and a tendency toward dollar strength and commodity weakness.
“The long-term implications of bailouts, tax shortfalls and lack of budget discipline is likely to be significant inflation pressure beginning about four years or so out, and continuing for the remainder of the decade,” Hussman says.
"I continue to anticipate a near doubling in the CPI over the course of about 10 years, focused primarily in the latter half of this decade."
Yields on inflation-protected bonds suggest consumer price gains in Canada may outpace those in the United States as the Canadian recovery gathers pace, Bloomberg reports.
The spread between Canada and U.S. 10-year break-even rates, which measure the difference in yield between inflation-linked and nominal bonds and is a gauge of long-term consumer price expectations, widened to the most in more than five months on March 19 after stronger-than-forecast data from Canada.
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