Investors are torn between two extremes. Is the US heading for a decade of Japan-style stagnation characterised by years of falling prices - or will the hundreds of billions of dollars likely to be pumped into the economy by the Federal Reserve lead to the opposite: rising inflation?
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"Investors are quite schizophrenic at the moment. They are worried about deflation in the short term but are concerned further out about inflation," says Keith Wade, chief economist at Schroders, the fund manager. "It means they will have to change horses over the next year or two."

FedsFew investors reckon that prices will fall persistently, especially with the Fed determined to head off that outcome. But, with economic growth still anaemic and core inflation at less than 1 per cent in the US, the immediate threat is clear enough.

"The deflation risks are probably higher than the inflation risks," says Richard Urwin, investment head in fiduciary mandates for BlackRock in London. "While we are in a low-growth environment, these deflation concerns aren't going to disappear easily."