Rising bond yields and inflation will dominate in 2011

ON EUROPE

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Cazenove's Chris Rice says extreme policy will lead to rising bond yields in the West and rising inflation in the East.

If 2010 was the year extreme policy worked, my hunch is 2011 will be a year marked by the unintended consequences of that policy. The world economy entered 2011 in decent shape, and, in the case of the corporate sector, in positively rude health. Many of the businesses we monitor are at or exceeding the peak margins of the previous cycle. So apart from the slight inconvenience of the euro sovereign crisis, we enter 2011 with boardrooms bullish and market strategists forecasting another very good year for equities. The two unintended consequences of extreme policy we can expect to domi...

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