Equities, commodities, and the risk of higher inflation

The fallout from COVID-19 will probably keep inflation subdued in the near term. But there is a risk of significantly higher inflation further ahead if earlier policy stimulus starts to push prices up sharply and central banks either fail to nip it in the bud, or perhaps choose not to. While traditional industrial commodities outperformed US equities considerably during the three episodes of high inflation in the US over the past 60 years, things might play out a bit differently if inflation rises significantly later this decade.