Economic and market insight
Central bankers have spent years focussing their efforts on fighting deflation. Now that long-dormant inflation is back, they have to stop it from bedding in while avoiding sending the economy into recession.
US monetary policy is tightening, sending the greenback higher. This should ease US inflation even as it squeezes the costs of living and doing business for foreign markets.
Central banks, squarely behind the curve, are preparing to raise rates swiftly. Inflation should be peaking, yet a European oil embargo is becoming more likely.
People are starting to react to increases in the cost of living, cutting non-essentials and spending less. Central banks are soon to follow suit by increasing interest rates further.
The war in Ukraine has dampened global growth as waves of COVID-19 continue to roll across the world. Meanwhile, politics is back to the fore in Europe and America.
Western central banks are trying to rebalance the scales in bond markets without causing a panic. Meanwhile, COVID-19 and bog-standard politics are still influencing markets in Europe and Asia.
Cost of living fears seem to be peaking in the UK as a raft of important protections end. How will the economy hold up as households and companies tighten their belts?
The 1970s suddenly seem relevant again given soaring oil prices, high inflation and rising interest rates. But we’re not expecting a rerun of 1970s-style spiralling prices, sputtering economic growth and weak equity market returns.
Earnings are booming in the West as the recovery rolls on despite investor nervousness.
Recent inflation headlines have made for uncomfortable reading, and volatility picked up as investors remained sceptical of policymakers’ messaging. But we don’t think rising inflation is here to stay as there are too many other phenomena that will push it down.
America is opening up along with the spring blossoms, and a strong summer of spending seems to be on the way. The rebound in fortunes has helped the S&P 500 reach new highs which, as chief investment officer Julian Chillingworth notes, go hand in hand with rising yields.
Bond yields and a new season’s flowers both sprung up last month, heralding an end to the dark days of lockdown winter. Chief investment officer Julian Chillingworth ponders the big question on investors’ minds – does this also foreshadow a prolonged period of higher inflation?
After a busy start to the year there’s still a lot of uncertainty swirling around in markets. But economies tend to bounce back hard after sombre periods, and hope remains that our eventual return to ‘normal’ will be no different.
A roller-coaster of a year finished on a high note for the markets, and we start 2021 with a sense of relief that one of the most difficult years many of us have ever experienced is behind us.
With a clutch of vaccines on the way soon, equity markets were in a buoyant mood in November. But there are still a lot of things we don’t know – and even some things we don’t know that we don’t know…
Equities fell in October as investors came to terms with tighter lockdown restrictions, but hopes for a new round of US stimulus under President-elect Joe Biden have buoyed markets, and Chief investment officer Julian Chillingworth reckons we should take heart.
With summer fading into memory, a long uncertain winter of social distancing lies ahead. It’s easy to feel gloomy, but as chief investment officer Julian Chillingworth argues, we should try not to buy into the doom.
As summer winds down and the pandemic persists, governments are finding it hard to taper their support measures.
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