Higher levels of CPI given tight labour markets, supply chain and geopolitical factors coupled with a very large (and potentially growing deficit) make it highly likely ... this is - however - going to mean that a lot of issuers will be faced with rising costs of debt if they wish to have long term financing in place ... which may mean they roll down the curve and finance short term more frequently than they might want to ... this means more liquidity risk in aggregate than we have seen in recent decades ... and adds some volatility and uncertainty to the capital markets mix ... and it will create some pinch points, inefficiency and opportunities - particularly in the parts of the market that need long term funding sources for capex intensive projects ... that banks and traditional capital providers will struggle to cope with ...
Lots of things to think about when allocating capital and designing strategies... particularly for those of us in private markets...