Franklin Templeton expects global inflation to remain high for several years and is buying inflation swaps for positioning

The head of fixed income at the company's Australian division, Siniakov, stated that over the past month he has increased his holdings in five-year US inflation swaps, expecting consumer prices to accelerate. He pointed out that it may take several months for oil transportation to return to pre-war levels, and that services such as Uber have started to implement fuel surcharges, indicating that cost pressures are being passed on to end users. "This won't be resolved quickly," Siniakov said. He mentioned that the potential medium-term inflation pressures from this issue have not been fully appreciated. Siniakov said that he bought five-year US inflation swaps, expecting the rate to rise to around 3% to 3.25%. Currently, the rate is about 2.59%, and the last time it exceeded 3% was in the early stages of the Russia-Ukraine war in 2022.