Rising inflation in the U.S. could end up being much better for consumers than for companies, so investors should be rotating out of corporate bonds and into asset-backed securities and other securitized debt, according to strategists at Goldman Sachs Group Inc.
Supply-chain disruptions are likely to limit corporate profits next year, which could hurt company debt, while pushing home and car prices higher, helping securities backed by those assets. Meanwhile wage inflation pressure that many companies are seeing will weigh on corporate profit while helping consumers, wrote Goldman Sachs strategists led by Marty Young and Lotfi Karoui.
