Fourth Quarter 2015
Our Global Macro Strategy Team's Inflation View
Summary of Our Inflation Views
- Continued Contained Inflation in Near Term: U.S. inflation, as measured by the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE), remains muted. We expect it to remain largely contained (1.5% to 3.0%) during the next 12 months.
- Goods Inflation—Weak Global Economy Keeping Prices Low: The global economy is mostly struggling. Europe has required monetary stimulus to fight deflation, Japan is slowly easing out of recession, and Russia, China, and Brazil are slowing.
- Currency Inflation—Strong Dollar Keeping U.S. Inflation Low: Divergent paths in economic growth and monetary policies between the U.S. and other economies have supported U.S. yields, making the dollar attractive and raising its relative value. This reduces the cost of dollar-priced imports, including key commodities such as oil.
- Services Inflation—U.S. Wage and Shelter Costs Are Rising: Wage and salary pressures are in the pipeline as employment improves. Also, rents and home prices are increasing.
- Longer-Term Monetary and Fiscal Policy Inflation Risks: Higher inflation (over 3.0%) could occur longer-term, driven by the unprecedented monetary and fiscal stimulus used since 2008 and stronger economic growth. Most monetary policies in the developed world are aggressively stimulative. Bank reserves, which could be unleashed at some point, are very high.
- Valuations on Inflation-Linked Investments Look Relatively Attractive: We believe strongly that some level of inflation protection be incorporated in investor portfolios.
Designing Better Outcomes: Inflation Solutions
American Century Investments offers a broad suite of inflation solutions designed to help preserve purchasing power. Our diverse set of six strategies can help offset various sources of inflation and can be easily integrated into existing investment portfolios.
Low Interest Rate Risk Stocks/Bonds/Cash Alternative Ease of Use
Provides Inflation Hedging Through:
Provides Inflation Hedging, Plus:
Inflation Hedge for:
Short Duration Inflation Protection Bond Fund
Short-duration bonds, primarily inflation-indexed
Inflation-Adjusted Bond Fund
Investment-grade, inflation-indexed bonds
100% investment-grade portfolio
Real Estate Fund
Exposure to rising rental costs
Global Real Estate Fund
Exposure to rising global rental costs
Strategic Inflation Opportunities Fund
Comprehensive, multi-strategy solution
Global Gold Fund
Gold company stocks
Low correlation to traditional asset classes
Low Interest Rate Risk
Ease of Use
Strategic Inflation Opportunities Fund:
Inflation-Adjusted Bond Fund, Short Duration Inflation Protection Bond Fund:
Global Gold Fund, Real Estate Fund, Global Real Estate Fund:
Global Gold Fund:
The opinions expressed are those of American Century Investments (or the fund manager) and are no guarantee of the future performance of any American Century Investments fund. This information is for educational purposes only and is not intended as investment advice.
For detailed descriptions of indices or investing terms referenced above, refer to our glossary.