Central banks across the globe are poised to raise policy rates in response to inflation concerns. By examining how US policy rates have impacted US risk assets historically, we consider how assets may react today. These tighter financial conditions may cap the upside potential for risk assets. Within equities and credit, the risks are particularly pronounced in growth stocks and investment-grade corporate bonds.
Our annual survey-based report of 152 US colleges and universities includes commentary and analysis of investment performance, asset allocation, and related trends.
While bitcoin and gold share some qualities, these two assets are different and should not be viewed as interchangeable in investment portfolios.
Our annual analysis comparing private equity globally with public peers.
The global economy continued its road to recovery in 2021, as the most severe economic impacts of the COVID-19 pandemic gradually receded. There were fresh waves of infection during the year, but the public health actions taken to counter them were less economically damaging. In the meantime, fiscal and monetary policy remained at extremely accommodative levels, supporting strong risk-asset performance.
Even as broad equity indexes remain close to their all-time highs, the proportion of stocks in their own ‘bear market’ has recently increased, particularly among speculative growth stocks.
US consumer prices increased 7.0% year-over-year in December, which is the fastest annual rate since 1982, according to government data released today. We expect US inflation will moderate in the coming months, in line with consensus forecasts, but we anticipate it will settle in a higher range than the previous cycle.
This analysis includes our observations on key metrics by which private equity managers execute their strategy.
This week, the Federal Reserve, the Bank of England, and to a lesser extent the European Central Bank all acted to tighten monetary policies. These tightenings came as inflationary pressures have surged in many countries and as other central banks have looked to rein in simulative policies. But, when combined with above-trend growth expectations next year and central banks’ likely cautious tightening approach, we suspect financial conditions will likely remain accommodative and supportive of risk assets.
No. While there is no danger of the fiscal floodgates opening in Europe, the ‘traffic-light’ coalition of the Social Democratic Party (SPD), the Greens, and the Free Democratic Party (FDP) looks set to oversee some loosening of the fiscal purse strings in Germany.