Coutts' Wong: Market is far too complacent about the threat of inflationary pressures

Impact on fixed income space

Monique Wong, multi-asset investment manager at Coutts, has predicted US inflation to surprise on the upside in 2018, pointing to the tight labour market, rising oil prices and the impact of President Donald Trump's landmark tax reforms.

The majority of analysts are forecasting US core inflation to rise to 2% from its current 1.8% mark, but Wong said the Consumer Price Index (CPI) excluding food and energy could rise as high as 3%, which could force the Federal Reserve's hand in hiking rates. Wong said Trump's Tax Cuts and Jobs Act, which has slashed corporation tax to 21% from 35%, will also provide a boost to inflation, as firms such as Walmart, Southwest Airlines and Wells Fargo have already announced plans to raise wages. How five big US equity funds could fare in a rising inflation and rates environment "We ar...