Wealth Adviser newsletter 04.02.22

Inflation fears realised and rate hikes widely expected

Inflation has dominated the news in recent weeks with just the latest figure from the eurozone bearing out investors’ worse fears with consumer prices rising by a record 5.1 per cent in January from a year earlier, keeping inflation higher than expected and increasing the pressure on the European Central Bank to respond with tighter monetary policy.
The eurozone is not the only one under pressure. Our feature this week details the predictions of risk advisory firm Validus whose models reveal the top macro risks for the year ahead. Validus reports that this year, the prospect of Fed rate rises – whether they meet market expectations (40 per cent probability) or not (35 per cent probability) – registered as the most likely macro risks, followed by stubborn inflation (20 per cent probability) and a flight to quality (5 per cent probability), all with significant currency implications.
We may be living in unpredictable times, but Nikki Howes, Investment Manager at Handelsbanken writes in our In My Opinion this week that her firm believes that exciting investment opportunities can be found in the global megatrends driving change across the world.
She says that these long-term trends don’t always fit into conventional financial market classifications; they can cut across traditional industry sectors and traverse geographic borders.
Avoiding the conventional might help with achieving success over the coming months.
Beverly Chandler, managing editor, Wealth Adviser

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