The wall of worry only gets higher

NN Investment Partners
By October 13, 2021 07:54

The wall of worry only gets higher

Multi Asset Quarterly: Economic outlook

The economic normalization continues, although at an uneven pace following the long Covid-related shutdowns. Further severe lockdowns look unlikely in most Western countries. Supply chain bottlenecks are blurring the near-term macro visibility. Inflation numbers have risen sharply, but we see this as transitory. On the policy side, the Federal Reserve will start tapering soon. In the medium term, the sustainability of the recovery will depend on virus developments, the temporary nature of high inflation, the willingness of policymakers to continue the accommodative policy mix, as well as the release of excess savings and private investments.

Market outlook

Due to a lack of profitable alternatives, investors continue to embrace risky assets and push markets higher. There is more reluctance than earlier in the year when this behaviour was fully justified based on economic, corporate and policy fundamentals. Volatility is rising. A new cyclical bounce in markets in the fourth quarter is possible. But it looks like challenges will continue to rise over the coming quarters as data normalize and policy moves away from a state of emergency. In addition, Chinese growth and policy need close monitoring. 

NN Investment Partners
By October 13, 2021 07:54

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