The reflation trade may not have long legs Posted by Izabella Kaminska on Sep 21 10:40. For all the talk of heightened inflation expectations on the back of QE3, Morgan Stanley analysts remain unconvinced. The truth, according to them, is that central bank action is having less than its desired effect. In fact, inflation expectations have remained well behaved if not subdued. As the team headed by Gregory Peters noted on Friday: Though the analysts do note that if there was a sudden pick-up in growth in the fourth quarter, as happened in the past couple of years, their prediction could be proved wrong. Nevertheless, until growth arrives, the idea that heightened inflation expectations will be sustained stands on shaky ground. This entry was posted by Izabella Kaminska on Friday, September 21st, 2012 at 10:40 and is filed under Capital markets. Tagged with bonds, Deflation, inflation, QE3.