• There is a lot of worry out there about new variants and high hospitalisations leading to increased travel restrictions being implemented and general lockdown extensions. At the same time as renewed lockdown worries, case growth is falling and vaccination rates are accelerating. • Market fundamentals also continue to improve despite near term hurdles. Economic forecasts are moving up with the greatest strength coming from the US. We believe there is further to go especially if the current negotiations over another fiscal package in the US lead to further stimulus. • But none of this increased activity has led to any significant movement in inflation forecasts. In fact, the only change we have seen is a cut to inflation expectations in China, the first economy to get back on track. One would expect some inflation but acting against it are the deflationary shock of the Covid19 pandemic, spare capacity in the global economy and the ongoing disruption across all industries.

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