The H2 economic outlook will feature divergences in growth, inflation and policy mix across regions. Stagflation risk will be a common feature across Developed Markets (DM). In addition, since there will no longer be a synchronous global cycle, country risk is back.

We are entering a tough phase of the regime shift, as the risks over economic growth add to the already hot inflationary backdrop. This means that stagflation fears will continue to drive the market and risk assets are likely to remain very volatile, particularly the most indebted companies and those with still excessive valuations.

The continuing surging inflation due to the supply shocks and the Ukrainian conflict have dominated headlines compounding to the possible repercussions surrounding climate change, further affecting economic and financial indicators in the medium term and beyond.

Dealing with the changes driven by the energy transition requires a complete rethinking of asset class returns forecasting and brings major implications for investors. In the piece we address the key themes for investors driven by the energy on a 10 and 30 years horizon and the implications on the strategic asset allocation and the asset classes that will be favoured.

The presentation provides insights into how the current war/energy crisis is exacerbating the already high inflation. The material also details what strategies investors can implement to protect their portfolios from inflation.

We expect QE to end in Q3, as announced, followed by rate normalisation, which is likely to lift rates out of negative territory over the next few months, with two hikes before year-end, followed by another in Q1 2023

United States: the increase in energy and commodity prices, which is pushing inflation higher, is negatively impacting the US consumer, both in terms of confidence and spending.

In the most recent edition of Amundi’s Asset Class Views, we perform an in-depth analysis of the implications of climate mitigation and Net Zero transition in the financial markets and climate risk-aware portfolios.

The economic impact stemming from the crisis will be uneven across countries, with some economies potentially benefitting from the commodity boost and others challenged by higher inflation dynamics.