Inflation Could Unexpectedly Climb This Year, Market Veterans Prepare

Inflation Fears Mount Amid Soaring Metals Prices and Geopolitical Risks

A mix of soaring metals prices, geopolitical risks, and threats to the Federal Reserve's independence is raising the possibility that inflation may push higher than expected in 2026, upsetting traders' expectations for stable to lower prices.

Market Veterans Prepare for Inflation

Portfolio managers are whispering about inflation worries in 2026, citing the potential for a surge in metals prices, geopolitical risks, and threats to the Federal Reserve's independence ^[1]. This has led to a shift in market sentiment, with some investors preparing for a potential increase in inflation.

Soaring Metals Prices

The price of metals such as copper, aluminum, and steel has been rising sharply in recent months, driven by a combination of factors including supply chain disruptions, increased demand, and geopolitical tensions ^[1]. This has led to concerns that inflation may rise more quickly than expected, potentially catching traders off guard.

Geopolitical Risks

Geopolitical risks, including tensions between the US and China, the ongoing conflict in Ukraine, and the impact of climate change on global supply chains, are also contributing to inflation fears ^[1]. These risks have the potential to disrupt global trade and lead to higher prices for goods and services.

Threats to the Federal Reserve's Independence

The Federal Reserve's independence is also under threat, with some lawmakers calling for greater oversight of the central bank's monetary policy decisions ^[1]. This has led to concerns that the Fed may be less able to respond to inflationary pressures, potentially leading to higher prices.

Conclusion

The possibility of inflation rising more quickly than expected in 2026 is a concern for market veterans, who are preparing for a potential surge in metals prices, geopolitical risks, and threats to the Federal Reserve's independence. While it is impossible to predict with certainty what will happen, investors would be wise to keep a close eye on these developments and adjust their portfolios accordingly.

Sources

[1] Inflation could unexpectedly climb this year. How these market veterans are preparing.