View of the New York Stock Exchange building on Wall Street. Photo: Reuters/Lucas Jackson

Asia Unhedged is not alone in our confidence that inflation, and bond yields along with it, are not about to surge back.

We wrote several weeks ago about “the many reasons why there won’t be a surge in US bond yields, and why you should buy equities.” The modest uptick inflation, when put in context, is not as scary as major financial news outlets would have you believe. In fact, it’s not scary at all.

Now, some big funds are easing back into securities that are most exposed to interest-rate risk, despite continued fear-mongering from others.

Money managers at Pimco, along with Nomura Asset Management are among those ready to add risk, Bloomberg reports Monday.

“We’re starting to get to a level where it’s interesting and we could cover our underweight in duration,” said PIMCO’s Geraldine Sundstrom, London-based managing director at the $US1.75 trillion-fund firm. “We do not think inflation will rise rapidly.”

Analysts at the firm see a modest pickup in prices staying in line with the Federal Reserve’s target, and thusly there is no reason to fear skyrocketing yields.

“My duration was negative all through December and January, now it’s positive,” Richard Hodges at Nomura said. “Yields rose very quickly to meet our targets when the market rapidly began to discount more rate rises in line with the guidance that the Federal Reserve has continued to give us.”