April inflation will be the ‘high-water mark:’ Deutsche Bank Wealth Management CIO

San Francisco Fed President Mary Daly told Yahoo Finance Live in an exclusive interview on Thursday that she sees the case for interest rates to move ‘expeditiously’ higher in order to pump the brakes further on surging inflation. And with the Fed growing increasingly hawkish in its endeavor to lower prices, uncertainty remains as to when month-over-month inflation will turn around.

Deutsche Bank (DB) Wealth Management CIO for the Americas Deepak Puri believes that prices are currently at their peak, and inflation will ease as the year moves forward.

“I think the narrative seems to be that the March, April numbers that we're going to see, especially on the CPI and PPI side, might be the high-water mark,” Puri told Yahoo Finance Live. “... There were some green shoots in the last CPI number. It was the slowest month-over-month over the last five months increase that we saw.”

Puri joined Yahoo Finance Live to discuss global market trends, volatility, inflation, and Fed policy. He pointed to the lowering of prices of some physical products — such as used cars — in the March inflation report released by the Bureau of Labor Statistics (BLS) as being a positive sign that a reversal could soon be seen.

Inflation hit another record high at 8.5% for March — a level not seen since 1981. Prices rose 1.2% from the previous month following a 0.8% monthly rise in February. Food, shelter, and gasoline were the biggest contributors to the jump in overall prices. The next CPI report covering the month of April is scheduled for May 11.

But although Puri believes the worst of the month-over-month inflation rate increases may soon be past, he acknowledged the risk that the Russia-Ukraine war may have on areas such as agriculture. The conflict has already taken a sizable toll on gas prices throughout the U.S.

“It remains to be seen [what impact] growing agricultural prices are going to have,” he said. “This is really coming from the Russia-Ukraine crisis, which is going to have an impact on agricultural commodities, which in turn would keep the nominal number pretty high.”

And as the Fed appears set to become increasingly aggressive in its campaign of interest rate hikes, investors are concerned that the economy may be cast into a recession amid geopolitical risks. Analysts and experts are sounding the alarm of an impending significant slowdown in growth as runaway inflation is reeled in.

Puri noted that his wealth management clients are becoming hesitant to put new money to work. He says the fixed income market and its investors are experiencing a reckoning of “capital destruction” in light of the inflationary environment.

“That is something the fixed income investors are not used to,” he said. “So really the big questions and concerns that I'm getting is [whether this is] the inflection point for fixed income, whether we need to make dramatic changes to the fixed income part of their multi-asset portfolio. And I think that's something we've been advocating for quite some time. Really, the big concern is on the plain vanilla bond portfolio that has somewhat of an intermediate or long duration.”

Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV

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