BlackRock and Pacific Investment Management Company are alert to the inflation risks that the market commonly overlooks.

BlackRock, Bridgewater Associates, and Pacific Investment Management Company's fund managers are adjusting their portfolios to prepare for the incoming new round of inflation. A certain fund under BlackRock is shorting US Treasury bonds and UK gilt bonds to guard against the possibility of interest rate cuts falling short. Bridgewater Associates favors stocks over bonds, while Pacific Investment Management Company sees the protection offered by US Treasury bonds with embedded inflation adjustment mechanisms. There are increasing signs that their concerns are not unfounded: in January, the yield spread between regular US Treasury bonds and inflation-protected bonds soared to the highest level in months, and another indicator reflecting market expectations - inflation swap contract prices also rose. The main reason for the market holding this view is the expectation that the strong performance of the US economy will once again push up prices; especially if the next Federal Reserve Chairman nominated by US President Donald Trump last Friday, Kevin Warsh, leads policymakers to implement faster and more aggressive interest rate cuts, upward pressure on inflation will further intensify. From a global perspective, the rise in commodity prices, massive government bond issuances, and investment frenzy in the field of artificial intelligence are all exacerbating this pressure.