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ICICI Securities Report
1960s-80s type of structural rise in bond yields argument weakens as inflation is showing signs of slowing down: Key argument for a sharp downside in equity valuations is being driven by the extreme fear of a structurally rising inflation and bond yields like the one observed during 1960s-80s in the U.S., thereby, resulting in an environment of significant underperformance for equities.
However, after the initial shock, due to the sudden escalation of Russia-Ukraine conflict, global commodity prices across the board have started declining along with freight rates, which weaken the structural inflation argument due to commodity prices.
Also, the feared wage-spiral conditions are unlikely given the softening outlook for job market going ahead as growth moderates.
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