LIVE MARKETS-Concerned about inflation? Turn to these assets shorter-term, and longer-term

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CONCERNED ABOUT INFLATION? TURN TO THESE ASSETS SHORTER-TERM, AND LONGER-TERM

The U.S. inflation rate has been stubborn in recent months. Indeed, January’s reading not only exceeded estimates, but also boasted the largest monthly increase in consumer prices since August 2023.

Jack Ablin, chief investment officer and founding partner at Cresset, believes price persistency is prompting investors, and Fed officials, to reconsider their inflation outlook, especially given the backdrop of tariffs and other trade tensions.

"The Fed paused its interest rate cuts due to elevated inflation levels, and concerns about tariff-related inflation spikes could prompt the Fed to keep rates higher for longer – or potentially hike," writes Ablin in his weekly market update note.

As Ablin sees it, investors concerned about hedging against a short-term inflation surprise should turn to gold.

Indeed, he thinks the prospect of tariffs on top of persistently high price levels presents a legitimate short-term inflation risk. Therefore, Cresset recommends investors consider buying gold versus TIPs to hedge their short-term purchasing power.

However, Ablin also says that longer term, "equities do a better job than virtually all other asset classes of staying ahead of inflation, allowing investors to maintain their purchasing power over time."

(Terence Gabriel)

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