How to gauge investors’ fear of inflation

WHAT DO INVESTORS fear most? In the Bank of America’s long-running survey of fund managers, the tail risk that has mostly preoccupied them until recently has been the pandemic. In this month’s survey, though, inflation rose to the top of the list of worries. It is not hard to see why. High inflation, if sustained, would require central banks to act decisively to contain it. That would mean the end of the low interest rates that have underpinned the prices of an array of expensive-looking assets, from stocks and bonds to property.