0429 GMT - Markets are likely underestimating the risk that inflation proves more durable as manufacturing activity recovers globally and raw material costs continue to rise, says Vincent Chung at T. Rowe Price. "While investors continue to look to AI-driven productivity gains as a potential offset to inflationary pressures, those benefits are likely to take time to materialize," says the co-portfolio manager in a note. In the meantime, markets may face periods of volatility as they reassess the outlook for growth, inflation and interest rates. Chung favors shorter-duration fixed income exposures in such an environment, including high-quality global high yield bonds and select emerging market credits. Inflation-linked bonds can also play an important role as a portfolio diversifier, he says. (monica.gupta@wsj.com)

(END) Dow Jones Newswires

June 25, 2026 00:29 ET (04:29 GMT)

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