February 2022 | Inflation is returning after decades of dormancy, and we predict a slowdown in economic momentum as 2022 progresses. US labor markets improved, encouraging the Fed to respond hawkishly, and we believe central banks will need to act to control inflation. Volatility is rising and will likely remain high as markets reassess the inflation path, yet moderate economic growth should help prevent a market crash.
01 | CIO View: We suggest investors take a cautious risk stance, implement tactical allocations, and shift from expecting nominal to real returns.
02 | Fixed Income: Traditional bond benchmarks are facing the challenges of high duration risk and low yields, suggesting the need for flexibility and a short duration bias.
03 | Equity: We recommend high-quality, cyclical value stocks with pricing power and the potential for earnings growth. Company-specific drivers will remain important.
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