By: Jeff Cox
CNBC.com Staff Writer
As commodity prices keep moving higher and bond buyers slowly head for the exits, investors are starting to give more credence to a looming inflation threat.
Through most of the recovery following the collapse of the financial system, policy makers had spent far more time warning about deflation, even as the Federal Reserve, led by Chairman Ben Bernanke, continued to flood the economy with money.
But growth in emerging markets and in the US—coupled with the trend of rising interest rates—has shifted market dialogue in a different direction. It's also changed investing trends—out of bonds and toward commodities, while stocks, particularly in the energy sector, only increase in popularity.
"What the bond market is sniffing out is higher perceived levels of future inflation," Greg Peters, head of fixed income research at Morgan Stanley, said in a CNBC interview. "While inflation today looks pretty benign, what bond investors don't like right now is the uncertainty factor around the future inflation picture."
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