Everyone is experiencing high levels of inflation across the board, and price rises also have an impact on investments.
This is particularly felt in the bond sector, which is adversely affected by inflation. Less so is the impact felt by high yield bonds, which have become more acceptable as a source of income in recent years due to lack of alternative sources of income.
The problem is the fear of recession, because as prices continue to rise so people will be taking more money out of the economy to pay for basic living costs.
For high yield bonds inflation is a positive, but for them to thrive there needs to be a positive growth environment, which is why some investors are growing concerned due to the difficult scenario laid out by the Bank of England.
However, as set out in this article there are ways to manage these dynamics, so opportunities still exist.
This article is worth an indicative 30 minutes' CPD.