Sam Sicilia was barely moved when the interest rate panic exacerbated the collapse of the world's largest bond market.

"the market is wrong about inflation," said Sicilia, chief investment officer of the A $56 billion (US $43 billion) Host-Plus Pty pension fund in Melbourne. "deflation is more powerful. Interest rates will effectively remain at zero. "

With governments around the world still adding trillions of dollars in stimulus packages to weather the pandemic, pension fund managers trying to figure out the long-term impact have asked: will inflation make a comeback? If the answer is yes, more than $46 trillion of global pension assets will be affected as central banks shift to continuously raising interest rates.

Five pension funds interviewed by Bloomberg News show that these investors are largely unconcerned about the risk of rising prices. Australia's pension assets total A $2.9 trillion (US $2.3 trillion).

Last week, bond trading sparked speculation that the $19.5 trillion global coronavirus bailout would inevitably cause inflation to rise to multi-year highs. On Thursday, yields on 10-year Treasuries soared to pre-epidemic levels, shaking markets from equities to credit; traders bet on more aggressive tightening, which briefly reflected expectations that US interest rates would rise at the end of 2022, at least a year earlier than the Fed had hinted.

Bond markets calmed down on Monday as investors expected the central bank to step up asset purchases to prevent yields from rising too quickly.

"I don't think they want to put the recovery in any danger," which means markets will not be allowed to tighten too quickly, said Michael Clavin, head of fixed income at Aware Super, Australia's second-largest pension fund, with A $140 billion in assets. There may be "an outbreak of inflation data, but we are not sure whether it is sustainable".