Shelter Poses an Upside Surprise Risk to InflationShelter Poses an Upside Surprise Risk to Inflation

The year-over-year change in the shelter component of inflation is virtually certain to accelerate over the coming months, thanks to often-overlooked methodological quirks that introduce substantial lags into inflation statistics. We believe the year-over-year change in the shelter component of inflation may not peak until early 2023. Fixed income investors can position their portfolios for rising interest rates and potential price volatility through targeted exposure to bonds with floating rate coupons and short maturities.

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