For the first time in 40 years, we may now have to face up to the corrosive power of inflation. The numbers attached to coronavirus bailouts are clearly astronomical. Attempting to protect portfolios could mean buying not-so-liquid inflation-linked securities and floating-rate bonds; and pursuing value and momentum strategies in equities; and purchasing gold.

It’s a good idea to have your inflation-hedging positions ready for what is likely to come in the next few years. Annual budget deficits have become so enormous that the only way to finance them is for the Federal Reserve Bank to increase the money supply. The downside? We will all pay the price in the form of massive and sustained inflation.

When investors get scared, they rush for safe-haven assets like the 10-year Treasury Note. The problem is that an imminent surge in inflation will drive bond yields higher and so push the price of securities down. Rising expectations of inflation will lead bond investors to demand higher yields to tempt them into buying the fixed-income securities.

The German program is buckling under the weight of surging costs and needs an urgent fix. The green surcharge will cost consumers about €26.2 billion this year. At a cost of some €11 billion to the budget, the government will cut the green fee by 2 cents/kWh next year. In other words, power consumers’ burdens will be relieved by taxpayers.

The last few months have been sunny and windy and the wholesale prices have been low due to the pandemic. But the owners of solar- and wind power stations in Germany receive a fixed price and the difference comes from a surcharge paid by consumers. It will likely increase by 25% in 2021 and an average household will pay 350 euros per year.

EDF said it does not yet know how the project will be funded. Humphrey Cadoux Hudson said: “it is important to get the lowest cost of capital”. Backers of nuclear power insist Britain needs to replace existing nuclear plants, given that it is committed to net zero emissions by 2050, and the country cannot rely on wind and solar power all of the time.

Output from wind farms was up by 40% compared with the first quarter of 2019 as Britain experienced the wettest and windiest February on record. Making sure the grid isn’t overloaded by wind and solar is a challenge for National Grid Plc. The grid operator asked for emergency powers to switch off renewable generators if needed to limit supply.

The UK issued its first bond with a negative yield as investors prepared for the possibility that Britain joins other European countries in having negative interest rates. Comments from UK central bank officials fuelled speculation among investors that the country may set benchmark interest rate below zero to support the economy during the coronavirus pandemic.

The asset manager Schroders is growing a new European fund focused on sustainable debt. Bonds earmarked for sustainable purposes had been expected to be more resilient in a downturn. However, the swift March slump followed unprecedented economic lockdowns and an oil collapse, leaving portfolio managers scrambling for liquidity.

A giant bond-buying program launched five years ago by the European Central Bank was conditionally approved by Germany’s highest court, but it demanded more information about its economic justification, in a move that could set limits on the ECB’s firepower and invite fresh lawsuits. The judgement was tougher than many analysts had expected.

Turkish lira slid towards an all-time low against USD as authorities’ efforts to tighten their grip appeared to backfire. Turkey’s banking regulator moved to curb currency speculation by making it harder for foreign investors to obtain lira. Countries such as Turkey have large foreign financing needs and are seen as vulnerable to a squeeze on funding.

From a family office perspective, you don’t want to take on too much risk, but you still want to deploy capital. We have seen a lot of clients saying, “Where should I invest if I want to be in the debt market.” Central banks are keeping economies afloat with cheap-money policies, making assets that used to preserve and grow family fortunes less effective.