Both interest rates and corporate earnings moved higher in the third quarter. Could greater inflation be far behind? If so, it would mean more bad news for fixed-income investors, who suffered a dip in bond prices last summer: a selloff mainly prompted by the allure of the stock market. In July and August $24 billion in cash seeped out of U.S. bond funds. For some time now most seers have laughed off the prospects of inflation. After a brief uptick last winter right before the Iraq war, annual inflation settled down to just above 2%.
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