Thursday, 13 May 2021

Tech, inflation, and the tyranny of the numerator

Over the last three months, market inflation fears have increased - and not without good cause, given the increasing number of companies reporting supply shortages, cost pressures, and price increase, and the recent US CPI print coming in at 4.2% - which has pressured the share prices of tech/growth stocks in particular (and to a lesser degree, the broader market). US 10 year treasury yields have risen from 0.9% to 1.7% this year, in fits and starts, and tech and other narrative-driven growth stocks have come under pressure with sell-offs correlating with higher inflation concerns and rising treasury yields.