David Jane: Rising inflation raises spectre of corporate defaults

Economic growth appears robust and inflation is finally reappearing, which is a foundation for our positive view on equities and cautious view on bonds. We try not to base our portfolios on a single-point forecast, however, but to consider a range of scenarios. This way we can offer some downside protection were our base case to prove inaccurate. The greatest risk we perceive is around the market's view of the reflationary trade. It is based on a ‘goldilocks' type scenario of benign levels of inflation oiling the wheels of growth and reducing the burden of the debt overhang. This, combin...