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00:00There is also a brilliant article actually are most read article that talks about some of the pinko point of view on what vaccinations mean for the world recovery. Are we a little bit too optimistic that getting herd immunity meaning you know means that actually we're rid of covered 19. And I'm no virologist then and I can say but I think we are hoping surgeon need that you know we'd get critical mass in the second half of 2021. And are we going to see a rather stronger recovery and in some places maybe already from the second quarter. So is very much the hope and this is what is in our forecasts. So we're to see early in the reflation trade going. Do you worry that actually inflation is coming with critical mass to worry central banks or will they just walk through it. Well I think we need to differentiate two part of this we know very well that in the next few months inflation is going to pick up because of these effect. And I think central banks so far are doing a good job at explaining why this is temporary. This is transitionary and we're going to look through. So the real question for all of us is where is this CPI rate going to land comes you know late 2021 December 2021. And will that push central banks over the edge. Our forecast is certain need that you know we will see inflation recede going into the year end and it's unlikely that central bank will keep their target. And therefore you know markets shouldn't worry too much about that. That said I mean there are some pressure especially at the wholesale CPI level. And for those who worry about inflation or for those worried that we are getting this forecasts wrong and there is an easy way to deal with this is to buy inflation protected treasuries. A lot of the juice might have gone because breach of the inflation rates are higher. But certainly the central bank ought to hit that target. There's more to come in the pricing of those and they can be a neat hedge. So I think you know it's about being a bit humble about this not worry too much and put some inflation protected securities. What former is still that phrase from your love there to be a bit humble really sizes it up for me. Geraldine give us the nuance away from higher inflation. Price down yield up. How do our listeners and viewers defend themselves from the idea of price down given inflation. Well I think there is a time when you know inflation goes up and it's a very healthy phenomenon for risky assets in general. Inflation has been too low and in some way we should rejoice in it. I think Central Bank will rejoice as well. I think you know it's good for equities is good for four or four for the economy and for the rest of it. So what would be worrisome is if it gets out of control and certainly a long way from that a long way from having to worry about this.

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Pimco Sees Risk in Premature Pandemic, Inflation Calls

Geraldine Sundstrom, portfolio manager at Pacific Investment Management Company (Pimco), discusses the reflation trade and says markets are “a long way” from having to worry about inflation getting out of control. She speaks on “Bloomberg Surveillance.” (Source: Bloomberg)

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