Barometer: Inflation presents greater risk to bonds than stocks

Barometer: Inflation presents greater risk to bonds than stocks

Luca Paolini, Pictet Asset Management.

While inflationary pressures will cause bond yields to climb , a healthy rise in corporate profits should offer some support to equities.

Times are tough for global financial markets. Monetary conditions are tightening while supply chain bottlenecks are starting to take their toll on the global economy. At the same time, inflationary pressures are proving more persistent than previously expected. 

As yields adjust to higher inflation and the prospect of tighter monetary policy, we believe fixed income markets will be particularly hard hit. High yield bonds appear especially vulnerable. Equities won’t be immune to market jitters either. But, on balance, we believe they should hold up better than bonds because economic growth remains strong enough to allow for positive surprises in corporate earnings.

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About Pictet Group

The Pictet Group is a partnership of seven owner-managers, with principles of succession and transmission of ownership that have remained unchanged since foundation in 1805. It offers only wealth management, asset management, alternative investment solutions and related asset services. The Group does not engage in investment banking, nor does it extend commercial loans. With CHF 609 (USD 689, EUR 563, GBP 504) billion in assets under management or custody at 31 December 2020, Pictet is today one of the leading Europe-based independent wealth and asset managers for private clients and institutional investors.

Headquartered in Geneva, Switzerland, and founded there, Pictet today employs around 4,900 people. It has 30 offices worldwide, in Amsterdam, Barcelona, Basel, Brussels, Dubai, Frankfurt, Geneva, Hong Kong, Lausanne, London, Luxembourg, Madrid, Milan, Monaco, Montreal, Munich, Nassau, New York, Osaka, Paris, Rome, Shanghai, Singapore, Stuttgart, Taipei, Tel Aviv, Tokyo, Turin, Verona and Zurich.


Pictet Group
Banque Pictet & Cie SA
Route des Acacias 60
1211 Geneva 73 - Switzerland