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Expect the Unexpected: The Role of Commodities During Periods of Unexpected Inflation

October 1, 2021
For most investors, maintaining the purchasing power of their assets over the long term is a primary concern, especially when future liabilities or spending needs aren’t fixed in today’s dollars. Maintaining purchasing power means that the nominal return they receive on their portfolio must outpace inflation, such that their real return—the return after adjusting for the impact of inflation—is positive. 

But what happens when the inflation that materializes is different—even drastically different—from what was priced in or expected by market participants? The result can have a profound effect on returns because asset prices have historically been much more sensitive to inflation surprises than to inflation itself. In this whitepaper, we will discuss what inflation expectations are and how we’ve chosen to measure them.  

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Greg Liebl, CFA

Director, Investment Strategy

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