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Funds How to profit from the deflation scare – MoneyWeek

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CounteringthedeflationistsarethosewhoarguethattheforthcomingriseinUKVATfrom17。

5%to20%(enoughbyitselftohiketheconsumerpriceindexrateby0。

6%)meanstalkofpricefallsispremature。

Ontheflipsideliesthespendingslowdownthatcouldbetriggeredbybigpublic-sectorjobcutsandpayfreezes。

Asitis,unemploymentroseinthethreemonthstoAprilandmustsurelyrisefurtheras25%governmentdepartmentalbudgetcutsarrive。

IntheUS,investorsarebracedforagrimnon-farmpayrollsfigure–analystsexpectunemploymenttoriseabove9。

7%ascensusworkisscaledback。

ThatcomesasUScoreinflation(minusfuelandfood)isatitslowestlevelsince1961。

Sowhatshouldinvestorsdoaboutloomingglobaldeflationfears?

Governmentbonds(gilts)areoneoption。

Mostpayafixedcouponandarevirtuallyriskfree,beingbackedbytheBritishtaxpayer。

Andasdeficitreductiongetsunderway,theBritishgovernmentshouldbeborrowingless,andthereforeissuingfewerbonds。

Thatbodeswellforthepricesofthosecurrentlyincirculation,evenwithyieldsalreadylow。


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