Asset markets are not pricing stagflation risk, unless…

By: Macro Strategy Team

April 28, 2026

By: Macro Strategy Team

Macro Strategy Team

As we discuss in the latest Mr.Risk, Will equity and bonds run out of time?,

Stagflation, simply defined by below trend growth and above-trend prices as captured by the ISM survey, is the usually the worst macro environment for equities over the past 30-years. And in theory, bonds should be a good diversifier in this environment.

For now, markets seem to be betting that stagflation will not arrive in 2026, but if it does, the bottom line is that investors are certainly not positioned for it. Unless of course they are assuming this time is different.

Author Bios

Macro Strategy Team

The Macro Strategy team provides cross-asset research and market intelligence across developed and emerging economies. Their expertise in FX, equities, and fixed income is complemented by proprietary indicators on investor behavior, inflation, and sentiment—turning complex data into actionable insights that help clients anticipate risks and capture opportunities.

1. Peter L. Bernstein Award for Best Article in an Institutional Investor Journal in 2013; Bernstein-Fabozzi/Jacobs-Levy Award for Outstanding Article in the Journal of Portfolio Management in 2006, 2009, 2011, 2013 (2), 2014, 2015, 2016, 2021; Graham & Dodd Scroll Award for article in the Financial Analysts Journal in 2002 and 2010. Roger F. Murray First Prize for Research Presented at the Q Group Conference in 2012, 2021, 2023. Harry M. Markowitz Award for Best Paper in the Journal of Investment Management in 2022, 2023. Doriot Award for Best Private Equity Research Paper in 2022.