Mind the Lag: Recession Fears Flare Too Fast

Tuesday 16 August 2022

Investment Talks

   

Mind the Lag: Recession Fears Flare Too Fast

August 2022| Investors expect central banks will tame inflation whatever the cost, even triggering recession if necessary. This may indeed be policymakers' approach in the short term as they seek to re-establish their credibility, but investors risk overestimating central bankers' ultimate willingness to hurt growth..  We predict that inflation will therefore be higher than many expect over the next couple of years, with important implications for asset prices. 

01 |  We predict that central banks will be aggressive in the short term as they try to re-establish credibility, with the European Central Bank a case in point.

02 | Investors may overestimate policymakers' willingness to hurt growth and misjudge how long it will take for inflation to respond to rate hikes.

03 | Inflation will likely stay high. Flexible duration, some real assets, inflation-adjusted bonds and select emerging markets may help investors navigate this regime.

Mind the Lag: Recession Fears Flare Too Fast

Important Information

Unless otherwise stated, all information contained in this document is from Amundi Asset Management US (Amundi US) and is as of August 16, 2022. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi US and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. Amundi Asset Management US is the US business of the Amundi Asset Management group of companies.

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