How to hedge against the risk of headline or core inflation? Analysts at Natixis look at equities, residential real estate and commodities to see which asset classes provide a hedge against the risk of headline or core inflation. 

Equities and real estate provide a weak hedge against inflation

“We see a low correlation between headline and core inflation and equities in the US; No hedge against headline or core inflation by equities in the eurozone.”

“Residential real estate provides a weak hedge against headline and core inflation in the US, and a weak hedge against headline inflation only in the eurozone.”

“In the US, oil, non-precious metals and agricultural commodities provide a good hedge against headline and core inflation; In the eurozone, oil and non-precious metals provide a good hedge against headline inflation alone; agricultural commodities provide a good hedge against both headline and core inflation.”