- Investors now treat food prices as the next inflation spike risk for global bonds after energy led this year’s selloff.
- The cited channels for higher everyday staple costs are a “Super” El Niño, tight fertilizer supplies, attacks on shipping and fallout from Europe’s record hot summer.
- The Federal Reserve has raised rates and vowed to tame inflation, yet sustained food-price gains create a new problem for bond portfolios.
Quotes
“Energy prices have been the scourge of bond markets this year. Now investors worry that the next inflation spike will come from food.”
“They see a risk that a “Super” El Niño, tight fertilizer supplies, attacks on shipping and fallout from Europe’s record hot summer will push the cost of everyday staples higher.”