Inflation is poised to regain influence on how cheaper U.S. stocks perform relative to shares of faster-growing companies, according to Morgan Stanley Wealth Management. The firm cited the ratio between the S&P 500 Pure Value and Pure Growth indexes, whose components best fit the categories of value and growth within the S&P 500, in a report Monday. Federal Reserve policy has broken down a traditional link between the ratio and the pace of inflation, the firm wrote, citing the breakeven rate for five-year Treasury securities. “We expect that fiscal policy will ultimately get the relationship back in place.”
Our View