Rising structural inflation could challenge bond portfolios in the second half of 2026, making active management more important. The Consumer Price Index rose to 4.2% in May, and T. Rowe Price analysts warn that geopolitical tensions are accelerating global economic fragmentation, driving up costs through reshoring, tariffs, and higher defense spending. Credit market resilience may be tested by further shocks, while central banks face pressure to compromise their inflation targets. Active bond ETFs like the T. Rowe Price QM U.S. Bond ETF (TAGG), which charges eight basis points and seeks to outperform the Bloomberg U.S. Aggregate Bond index, can adapt more quickly than passive funds and scrutinize issuers more closely.
T. Rowe Price Group IncArticle promotes active bond ETFs like T. Rowe Price's TAGG as a solution to structural inflation, potentially increasing demand for its product.