Share: By Bluford Putnam and Erik Norland The year 2021 is likely to go through several stages, with the pandemic spreading rapidly at the start, then widespread distribution of vaccines, followed by a full opening of economies around the world. Markets, however, are forward-looking, such that prices in various sectors will be anticipating what a post-pandemic world will look like. Here is our perspective on the volatility drivers for a variety of asset classes to get the thought processes churning. I. US Rates: Inflation on the horizon? The fusion of fiscal and monetary policy with massive federal government budget deficits and large-scale purchases of Treasuries and mortgage-backed securities by the Federal Reserve sets up a potential scenario for rising inflation. The inflation scenario puts the back-end of the Treasury yield curve in play, regardless of how long the Fed anchors the short end with zero rates. And there will be an increased focus on Treasury Inflation-Protected Securities (TIPS) for those looking to get a market read on evolving inflation expectations. We want to make several observations about the inflation process to assist in analyzing the probabilities of meaningful inflation pressure arriving in the U.S. in the second half of 2021 or in 2022: