Headwinds ahead: Worsening supply chain and labour market bottlenecks have slowed the recovery and the impact of the virus has lingered. Consequently, expectations for eurozone and US GDP growth in the short run have fallen, while inflation expectations have risen and markets have had to adjust their views on what central banks are likely to deliver.
In the near term, we worry that confidence in the growth outlook will wane, particularly given the weakness in China, ‘stagflation risk’ and ‘margins squeeze’ concerns. With equity markets near all-time highs, we see more potential headwinds than tailwinds ahead.
Watch our monthly asset allocation video with Chief market strategist Daniel Morris for more analysis and our positioning in the various asset classes.
