The crisis of the Mediterranean nations (especially Libya) and also the Middle East are doing to raise the price of oil.
As you know we have always supported an increase in both interest rates and inflation, but now with this situation, these risks become even stronger.
As higher interest rates in recent days have expressed both members of the ECB Draghi, the governor who says that low rates have not led to boost the economy.
In light of this increased interest rates by one percentage point a year there'd be surprised over the same period, inflation could rise to 4%, as stated in previous post, the ECB will provide more room for inflation rather than increase rates heavily (as would be needed to keep inflation below 2%) and hence will continue to have negative real returns.
The sharp rise of oil blocks the fragile recovery, letting go into stagflation.
In light of this scenario should further increase the inflation-linked bonds, are also well-linked securities Euribor, avoid the fixed rate with average maturities long, without much attention to Steepener TARN, because the yield curve should lose rigidity as increase by more short-term rates than those in the long run.
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