Investors Seek Refuge in Gold and Bonds Amid Stagflation Fears

Global investors are bracing for stagflation, with 70% anticipating below-trend growth and above-trend inflation over the next year, according to a BofA Global Research poll. Weak U.S. labor data, surging core inflation, and unexpected producer price spikes have amplified concerns. Yet equity markets hover NEAR record highs, and bond markets remain eerily calm.

"Stagflation is in the mind of the market, but not the price," observes Carmignac fixed-income manager Marie-Anne Allier. The disconnect highlights growing unease among institutional players. Longer-maturity bonds face particular pressure as persistent inflation erodes the real value of fixed coupons—a worry now keeping pension funds and insurers awake at night.

The pain may spread globally. "Interest rates and the long end of the bond curve are highly correlated between G7 economies," warns Foresight Group's Mayank Markanday. Early tremors are already visible, with long-dated bonds selling off across major markets while shorter yields diverge.