Inflationary concerns loom over government debt

05/26/2009 | Financial Times (tiered subscription model)

During the past couple of months, equities, corporate debt, commodities and other asset classes have rebounded, but government debt has been the one exception. While inflation has been tamed for the moment, concerns are mounting that stimulus programs will produce inflationary pressure, which would hurt conventional sovereign bonds. "We feel that commentators are heavily focused on the slowdown in the global economy and deflation, which is understandable, but they are not sufficiently troubled about the potential inflationary consequences of the large-scale government intervention that is going on," said Robin Creswell, managing principal of Payden & Rygel Global.

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