Below Jarred Sullivan, Global Multi-Asset Investment Strategist provides his view on Inflation, rate rises and global equities.
The recent rate increases in the US and UK will assist in lowering inflation expectations.
We remain cautious on global equity returns, as the supportive monetary and fiscal policy that helped propel equities last year continues to fade.
We are relatively defensively positioned when compared to 2021 holdings.
Higher rate increases, along with a reversal of quantitative easing in the US, are tightening financial conditions, lifting the cost of borrowing and effectively play a role in tempering aggregate demand to levels that are more in line with aggregate supply. This will assist in lowering inflation expectations.
In summary:
• Large cap value stocks are doing well
• Alternatives are no longer an alternative
• Equities that exhibit value bias have outperformed growth equities
• Energy sector business and semiconductors are still attractive, and we expect to continue to perform well.
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Article written on the 20 June 2022.