Insights

• Economic recovery likely undeterred: Rising energy prices add risk to Europe’s recovery but are unlikely to derail the global economic recovery.
• Expect further equity volatility: We see the strongest impacts in commodities, energy and financials, but focus should shift quickly to interest rates and supply-chain resolution.
• Seeing value amid spread widening: We believe the impact of Russia’s actions on fixed income markets has largely played out, and any further widening in credit spreads could present opportunities.

The market’s expectations for curve flattening may be excessive, as the timing of rate hikes and the aggressiveness of the Federal Reserve are still open to debate.

January 1, 2022 marked a significant milestone in the transition from LIBOR to alternative reference rates.

We see scope for continued global equity gains as the impacts from Covid, policy stimulus and inflation diminish. The current balance of market factors keeps us overweight U.S. large cap stocks.

Matthew Toms, CFA, Chief Investment Officer of Fixed Income, shares our outlook for the markets for the first half of 2022. 

The market’s curve flattening expectations may be excessive, as the timing of the hikes and aggressiveness of the U.S. Federal Reserve are still open to debate.

Sean Banai, CFA, Head of Portfolio Management, shares our outlook on Global Growth for the first half of 2022. 

Chris Wilson, CFA, Senior Client Portfolio Manager, shares our outlook for Central Banks for the first half of 2022. 

The prevailing themes in 2021 were economies reopening, corporate balance sheet repair and strong capital market activity. These trends contributed to a general reversal of the myriad headwinds that marked a tumultuous 2020.

Global inflation, accentuated by energy and commodity prices, will peak in early 2022, but the rate of decline will vary across economies. Matthew Toms, CFA, Chief Investment Officer of Fixed Income, shares our outlook on inflation for the first half of 2022.