Recession looms for 2023
Economic and Strategy Viewpoint The coming year is expected to be one of recession for the advanced economies with the eurozone now expected to join the US and UK in recording a fall in output for 2023 as a whole.
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Tag "Central Banks"
Global Asset Allocation: The View From Europe
Market Perspective Volatility likely to remain elevated in the new year as central bank policy expectations diverge amid evidence of slowing growth and moderating inflation. While slowing the pace of tightening, the US Federal Reserve reinforced its commitment to taming
The Year of the Bond
The year 2022 proved to be a year of a great reset for fixed income aficionados. Bond prices are sharply lower and yields are meaningfully higher. Following a nearly 15 year period of ultra-low interest rates that starved pensions and
China reopens; developed economies slow down
Central banks have started to moderate the pace of tightening but we are not close to a pivot. Inflation remains too high and US labour market data continue to point towards a tight market. Central banks will keep rates at
Global Strategy 1Q 2023
High inflation and increased interest rates should lead to only weak GDP growth. Central banks have not yet completed the cycle of interest rate hikes and geopolitical uncertainty could lead to increased volatility in financial markets for some time. We
Implications Of An Inverted Yield Curve
With the Federal Reserve (Fed) continuing to hike interest rates, the probability of a sustained inversion in the yield curve is on the rise. Historically, an inverted yield curve, a common phenomenon late in an expansionary cycle, has been one
Wage Growth in Europe: Evidence From Job Ads
Faced with the risk of persistently high inflation, both the European Central Bank (ECB) and the Bank of England increased their main policy rates substantially in 2022. Policymakers have signalled that more increases are coming. To calibrate the scale and
Inflation and the correlation conundrum
Why it’s time to look at liquid alternatives in a new light: The current market environment has not been kind to traditional multi-asset portfolios, with bonds providing little offset in an equity market brought down by rising interest rates. Central
Embracing Change
Growth is slowing and inflation is climbing steadily due to the serious energy shock in late 2021. Central banks are starting to withdraw monetary stimulus and talking about rate hikes in the near future. The spectre of stagflation is re-emerging,
TLTRO in the context of ECB policy normalisation
TLTRO repayments and redemptions will drive incoming ECB passive QT over the next few quarters. So far, banks have repaid a small amount of liquidity, while the ECB’s recent decision on remuneration of excess reserves has helped keep current excess
Equity investing in an inflationary environment
After a long hiatus, the resurgence of inflation has become a key concern for investors over the past year. Central banks are moving towards a tighter monetary stance as they seek to tame long-term inflation expectations. With falling real incomes
The Federal Reserve will stay hawkish — what will that mean for markets?
Stocks and bonds have pulled back since the Fed clarified its commitment to fighting inflation. Despite volatility, we believe equities will stay within a broad trading range and not retest earlier lows. Rising yields, particularly among spread assets, should make
Quarterly Outlook Q4 2022
There was no shortage of fear in the global bond markets in the third quarter. Central banks aggressively pushed short rates higher in response to the worst inflation of the last half …
Cyclical Outlook: Prevailing Under Pressure
Our baseline cyclical forecast includes shallow recessions and rising unemployment across large developed markets, with growth unlikely to bounce back quickly. Central bankers appear squarely focused on …
Investing in volatile times
The investment lexicon is currently dominated by inflation and recession. But what could these terms – so readily used by investors and their advisors – actually …
De obligatiemarkten en de moeilijke evenwichtsoefening van de beleidsmakers
Het risico op stagflatie maakt het leven van overheden en centrale banken veel moeilijker en het toegenomen risico op beleidsfouten zal de volatiliteit op de obligatiemarkten waarschijnlijk hoog houden. Maar er ontstaan ook beleggingskansen. Het VK ligt de laatste tijd
Recession risk – the point of recognition approaches
Monthly investment outlook august 2022 Just as markets had to reprice a new interest rate regime in early-2022 amidst fading hopes for a transitory inflationary backdrop, they are now similarly beginning to recognise that the prospects of an economic soft
Global Fixed Income Macro Outlook Twin peaks
For all of 2022, we have focused on tighter monetary policy, discussing the dilemma faced by central banks (in ‘Czech Mate’) and their subsequent decision to prioritize the war on inflation (in ‘The Inflation Game’). As we peer into 2023,
Central bank watcher: Work in progress
It’s work in progress for central banks. But the meaning of this phrase differs depending on the bank in question. For the Fed it means taking policy rates another big step towards restrictive territory. The ECB seems to be edging
Sticking with reduced risk taking
BII Global weekly commentary The new regime of macro volatility is playing out with weaker growth, persistent inflation and volatile markets. We stick with our dialed-down risk stance. U.S. stocks slumped and yields surged on a renewed rise in core
Multi-asset investing in times of volatility
2022 has been one of the most volatile periods in recent years for global equity and fixed income markets. The outbreak of the war in Ukraine, global supply chain disruptions, global inflationary pressures, less accommodative central banks and COVID-19 restrictions
Investment Event: ECB jumbo hike
ECB forced to tighten more agressively
Central bank chiefs ready to slug it out over inflation
Investors’ Outlook: The news flow ebbed over the summer but the headlines that did come through weren’t always positive. One small news item may have cheered us up, though: After 12 years under the European Union’s watchful eyes, Greece …
Are We Entering a New Era of Higher Inflation?
An Analysis of the Risign Entrenchment of Inflationary Shocks
No Excuses: Plan Now for Recession
Inflation’s Causes, Prospects, and the Fed’s Toolkit Inflation is a simple consequence of a supply/demand imbalance. If demand exceeds supply, prices rise until balance is restored. The current surge in inflation has been caused mainly by blowout spending, supply chain
Fixed income markets: when short term pain can bring long term gains
2022 has not been a great time for bonds. The Bloomberg Global Aggregate Index and Bloomberg US Treasury Index both hit historical lows, returning -13.9% and -9.1%, respectively, in the first 6 months of 20221 . Meanwhile, risky asset classes
EM local currency debt should be relatively resilient to potential Fed hikes
Historically, emerging market (EM) local currency debt has tended to weaken with rising US interest rates, but our research shows that much of this has generally occurred before Federal Reserve (Fed) interest rate hikes have taken place. As the Fed
Annual Economic Report 2022 of the BIS
Introduction There is no respite for the global economy. Two years ago, it was shaken by the onset of the pandemic, as an overwhelming health crisis turned into an overwhelming economic crisis. While the after-tremors of the pandemic still reverberate,
Global Asset Allocation: The View From Europe
Market Themes Whatever It Takes 2.0 Keep On Smiling
Global Asset Allocation: The View From Europe
Market Perspective Inflation concerns remain at the forefront for central banks and investors as global growth continues to trend lower amid supply disruptions, geopolitical challenges and reduction of liquidity, setting the stage for a challenging macro backdrop. The US Federal
Factorbeleggen aandelen
Wisselend beeld voor factoren in turbulent eerste kwartaal Aandelenmarkten startten het jaar met forse verliezen. Voornaamste redenen zijn het verkrappende monetaire beleid van de belangrijkste centrale banken om inflatie te bestrijden en de Russische invasie in Oekraïne. Value, momentum en
Views in brief: Nowhere to hide
Global tactical asset allocation views brief As inflation data continued to surprise on the upside, major central banks had no other choice but to tighten their monetary policies more aggressively than markets had expected. This led to speculations that a
Play the desynchronization of the cycle
CROSS ASSET Investment Strategy: The current repricing is a reminder of a regime shift in which stagflationary concerns are becoming prominent. Investors should move towards quality segments in credit and equities, and aim to benefit from the regional divergences that
ECB faces tough choices as it prepares to raise rates
So far in 2022, the European economy has held up remarkably well despite investor worries about a war-induced recession. But as the European Central Bank (ECB) prepares to hike interest rates at its 21 July meeting, the economy faces substantial
Rates roller coaster
The US Federal Reserve’s (Fed) decision at its latest meeting to raise the fed funds rate by 75bp pushed expectations for the peak level next year to more than 4%. Simultaneously, fears that economic growth is slowing more quickly than
Defensively positioned for central bank shock therapy
Negative supply shocks and the hangover from large demand-side stimulus are keeping global inflation stubbornly high. Central banks, most notably the US Federal Reserve, are committed to reducing inflation by significantly tightening financial conditions. The extreme …
Look to credit opportunities amid bond market rout
It is no secret that 2022 has been challenging for fixed income investors. High inflation and the US Federal Reserve (Fed)’s initiation of interest rate hikes have weighed on markets. Nevertheless, the broad credit universe provides ample opportunities for investors
An open letter to Mario Draghi
Dear Mr Draghi, After a busy couple of months leading a fractious Italian government through various crises, you must be looking forward to a well-deserved summer holiday. Before you and your team leave for the beach, the ECB is preparing
The battle against inflation: are emerging markets ahead of the curve?
As Covid's impact fades, inflation has become a major worry for policymakers. Surprisingly, emerging market central banks are moving faster than their rich country peers to contain the threat. Developed economy central banks have fallen behind the inflationary curve, despite
Monetair beleid en inflatie
Na een lange periode waarin inflatie (ruim) onder de doelstelling van de Europese Centrale Bank lag, zijn de prijzen in Nederland en in het eurogebied de afgelopen maanden omhooggeschoten. Dit is deels een gevolg van de heropening van de economie
Don’t fight the Fed
Restrictive central banks and high inflation rates are likely to continue to weigh on the economic outlook. Macro outlook – The US Federal Reserve stays its course High inflation rates are increasingly permeating global economies, and sharp increases in commodity
Summary of Economic Projections
In conjunction with the Federal Open Market Committee (FOMC) meeting held on June 14–15, 2022, meeting participants submitted their projections of the most likely outcomes for real gross domestic product (GDP) growth, the unemployment rate, and inflation for each year
Bringing balance back to capitalism: the next decade
Since the 1980s, the global economy has been fuelled by an asymmetric capitalism. Significant interventions by governments (fiscal policy) and central banks (rates and QE), particularly during the Covid pandemic over the last two years, have resulted in disparity of
Recession risks rise as inflation takes its toll
Economic and Strategy Viewpoint Q2 2022 – The peak in global inflation is probably not far away, but there are several reasons to think that it will fall relatively slowly. Lockdowns in China have caused bottlenecks in global supply chains
Central Bank Digital Currency Experiments
The Bank of Japan (BOJ) currently has no plans to issue central bank digital currency (CBDC), but to ensure the stability and efficiency of settlement systems as a whole, the BOJ regards it …
Looking beyond Russia – Ukraine
MONTHLY INVESTMENT OUTLOOK Bond markets continued their 2022 slump while equity markets rebounded in March as both began to look beyond the Russia-Ukraine narrative and focus on the evolving global economic and policy backdrop. Expectations in both the US and
Senior Loan Talking Points
In an eventful week in which the Fed raised interest rates by 50 bps, the loan market was not immune to the continued selling pressure and negative sentiment that has plagued performance in other assets for virtually the entirety of
Inflation, central banks and rising rates – Q&A with Andrew Cormack
It feels as though US policy makers have spent the entire post-global financial crisis period trying to generate inflation. Now that it’s here, it seems like the wrong kind of inflation. How do you see inflation playing out in the
War, inflation and hawkish policy pressure the financial markets
The world and markets continuously change, but over the first three months of 2022 there have been shocking shifts in the landscape and asset prices. Russia’s invasion of Ukraine caught many off-guard. Beyond the terrible hardships this war has already
The Reckoning
Inflation and Russia’s invasion of Ukraine dominate media headlines and the economic and financial environment. US inflation has accelerated further to an average of nearly 7% year-over-year (Y/Y) in the six months through February, from close to 6% over the
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