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    1. Guide to the Markets

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    Guide to the Markets

    Updated each quarter, the Guide to the Markets illustrates a comprehensive array of market and economic trends and statistics through compelling charts.

    Key themes for Q2 2022

    Karen Ward, Chief Market Strategist, previews this quarter’s themes and invites you to use the Guide to help navigate the investment landscape.

    Inflation to be higher for longer

    The Ukraine crisis has resulted in a sharp increase in the price of many commodities (Guide to the Markets – UK pgs 78-81). Alongside this, supply bottlenecks are likely to persist as China imposes lockdowns to control the spread of Covid-19 (pg 13). Inflation is likely to be higher for longer (pgs 23, 24, 38, 39). This will weigh on disposable consumer incomes (pgs 20 & 41) and corporate profits (pg 68), although we expect governments to provide some fiscal support to ease the pressure (pg 34).


    Interest rates to keep rising as long as growth is robust

    With labour markets tight in both the US and UK (pg 11), central banks are concerned that cost shocks will feed into higher wages and inflation will become more entrenched. The Federal Reserve has signalled its intention to deliver multiple rate hikes over the course of this year (pgs 9 & 25). As long as the recovery remains robust, we expect these to be delivered and for longer-term interest rates to rise further. The European Central Bank is expected to be more patient (pg 32), particularly in the event of a more severe disruption to European oil and gas supplies from Russia.


    Higher interest rates will help value stocks catch up

    Persistently higher inflation is likely to pose ongoing challenges for government bonds and high-quality fixed income (pg 70). Although interest rates are expected to rise, we expect real interest rates to remain negative for some time (pg 71).

    Equities should be resilient to higher interest rates as long as corporate earnings continue to grow (pgs 50 & 56), although value stocks are likely to benefit from persistent inflation and higher interest rates more than growth stocks (pg 51).


    MORE INSIGHTS

    Guide to Alternatives

    Get insights on macro topics such as manager dispersion, while also diving into real estate, private credit, private equity and hedge funds and more.

    Read more

    Mid-Year Investment Outlook 2022

    Our Mid-Year Investment Outlook 2022 explores what type of recession might be priced into markets and the impact for investment decisions.

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    On the Minds of Investors

    Drawing on the depth and breadth of their market and economic expertise, our global macro strategists offer insight into today's big investment themes to enable more confident portfolio decisions.

    Read more
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