Safer asset bonanza
It appears that we are staring down the barrel of a gun with regards to energy driven inflation in Europe this winter. We talked back in May 2021 about the potential for kinked supply curves to emerge whereby beyond a particular level of supply constraint, the price goes parabolic….
Abhayjeet Singh Bal, credit analyst in Pemier Miton’s fixed income team, explains why they remain underweight in Europe as a result of continuing concerns about the impact of the energy crisis on European companies.
The current narrative reads that we have high inflation and central banks are getting serious about tackling it. This will result in lower growth and with lower growth comes lower demand which will automatically bring down inflation. There is another, more worrying scenario that could play out, especially in Europe.
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