29 April, 2022

Inflation fears and the conflict in Ukraine weigh on markets

Executive Summary


Global equities and bonds posted declines during the first quarter on fears of tighter monetary policy and concerns about the conflict in Ukraine.  The conflict in Ukraine has caused tremendous human suffering and has led to a commodity supply shock, increasing uncertainty for the global economy.  Economists have revised their growth estimates lower for 2022, although estimates for 2023 have remained more stable.  The Fed raised rates in Q1 and is expected to continue tightening monetary policy this year, with the expectation of balance sheet reduction starting in Q2.  More recently, COVID lockdowns in major Chinese cities are likely to add to existing supply chain issues.  The good news is that the global economy entered the year on a strong trajectory, making it better able to absorb these shocks.

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