Inflation and geopolitics: Many risks but no global recession in sight
Macroeconomic update for March 2022
As was the case last month, inflation continues to occupy us. In addition, geopolitical tensions have sharpened and are causing uncertainty in the markets. But there is also good news.
How we position ourselves strategically: The monthly CIO update analyzes the current market environment and reveals the backstory. Dan Scott, Head Multi Asset and Dr. Reto Cueni, Chief Economist were our presenters.
Intact growth prospects despite inflation and risk
Markets are currently going through a weak phase. There are several reasons for this:
- Inflation which we have already discussed here in the recent past, continues at a high level in the USA and the Eurozone.
- The invasion of the Ukraine by Russian troops is causing geopolitical tensions.
- Subsequent higher gas and oil prices will lead to a spike in inflation.
Central banks have reacted by announcing higher interest rates. This puts pressure on equity markets. But there are also positive messages: the Covid-infection rate is sinking fast and the ongoing reopening of the economies should spur growth. On top of that, we expect inflation figures to start grinding lower in the next quarter. However, the conflict in the Ukraine is currently increasing the uncertainty of our forecasts significantly.
Given the expected growth, we maintain our slight overweight in equities. We are also overweighted in commodities (inflation hedge) and gold (risk buffer).
