All Inflation articles – Page 28
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Global CIO Q&A: on inflation, rates, recession and more
Inflation has reached record levels. What do you expect in the upcoming months?
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Macroeconomic Picture - October 2022
United States: Growth. We are still calling a soft landing in the US, with an extended period of sub-par growth for 2023 and 2024. We expect the US economy to grow by 0.9% in 2023 (1.1% Q4/Q4) and 1.3% in 2024 (1.3% Q4/Q4). Inflation. Headline inflation has peaked in the ...
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Too early for a Fed pivot
The flattening of the US yield curve will depend on the persistence of core inflation and on the impact of monetary tightening on growth. The more resilient the US economy proves to interest-rate hikes, the more aggressively the Fed will have to tighten monetary policy, thereby increasing the risk of recession. We have gone from ‘bad news is good news’ to ‘good news is bad news’.
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United States: a green industrial policy in the making
The US Congress’s August approval of the Inflation Reduction Act (IRA) came as a surprise to most observers. With the mid-term elections just months away and no majority in Congress, no one expected new legislation to be passed. Yet, the Democrats and Republicans managed to reach a compromise. We discuss below the measures announced to promote the environmental transition, which is the centrepiece of the act.
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Perspectives in today’s real estate market
Uncertainty has increased globally due to inflation and conflict, but real estate continues to offer long-term thematic tailwinds:
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Cross Asset Investment Strategy - October 2022
Geopolitical risks, inflation and hawkish central banks translate into a cautious stance on risk assets such as credit, in which, a deceleration in growth (and its impact on earnings) could create concerns over cash flows and liquidity, especially for the lower rated companies. Hence, we prefer US IG and are defensive on HY.
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What role can renewables play in strengthening Europe’s energy security?
Winter threatens to bring the first severe European energy crisis in decades. As leaders grapple with potential solutions, renewable energy capacity is in the spotlight.
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Impact of rising inflation on European logistics real estate
Clarion Partners remain optimistic that European logistics real estate should continue to perform well on a relative basis going forward.
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Central Bank Watch: To neutral and beyond
The Franklin Templeton Fixed Income (FTFI) Central Bank Watch is a qualitative assessment of the central banks for the Group of Ten (G10) nations plus two additional countries (China and South Korea).
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More Swiss policy tightening, but how?
Concluding seven years of negative interest rates, the Swiss National Bank (SNB) tightened monetary policy at its September meeting, warned that further rate increase could be necessary and joined other global central banks in foreseeing significant risks to the global economy. Lifting base rates by 75bps to 0.50%, the bank also raised its inflation forecasts and unveiled measures to manage excess liquidity.
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Policy Excesses and Market Discipline
We are seeing bond investors standing up for themselves against policymakers, and while equity investors are experiencing pain from this struggle, the end result may be a more sustainable, fundamentals-based market.
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Global Investment Views - October 2022
Geopolitical risks have returned to investors’ radar screens with President Putin’s escalation of the war in Ukraine. At the same time, inflation remains in the spotlight: the latest US reading was concerning, causing yields to rise while equity markets tumbled.
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Growth and evolution of the real estate sector
The current macroeconomic environment is having repercussions for all asset classes. The real estate sector continues to remain strong, offering a good protection hedge to inflation thanks to its robust nature and low correlation to other asset classes.
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Central banks split by fiscal packages vs inflation
In the latest instalment of Simply put, where we make macro calls with a multi-asset perspective, we analyse the market response to the UK’s latest fiscal stimulus and suggest this situation could be replicated across Europe as winter takes hold.
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Clean energy investments: a new addition to the investors’ inflation toolkit?
While investors have typically looked to commodities as an inflation hedge, a lack of income, coupled with volatile prices, has resulted in low risk-adjusted returns. Can direct energy investments help investors guard against rising prices?
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CIO views: what about an outlier scenario?
In the current context of interest rates being higher for longer, what would happen if an extreme situation played out to amplify existing trends? For instance, interest rates rose to 6% or inflation increased to 20% in a developed market?
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Portfolio construction themes in these times of inflation
Investors seeking to put this bear market behind them aren’t out of the woods yet. Hopes that inflation might peak quickly, that the U.S. Federal Reserve would pivot, and that the global economy could emerge unscathed — all have diminished.
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Preparing portfolios for the unexpected
Asset valuations are undergoing a considerable reshuffle in 2022, from bonds to equities to commodities. This vast reshuffling of the cards reflects a rapid rise in interest rates and especially in long-term real rates. The rise in real rates is unprecedented since the establishment of inflation-linked bond markets in the late 1990s, and triggering deep concern as US 10-year real yields approach 1.5%.
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Fixed Income Views: Paradigm shift
Global central banks adapt to a new reality as they continue to raise interest rates to fight inflation and bring it under control. Fixed Income Views explores the implications for investors as they prepare to be challenged by rising rates and higher volatility.
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Can we trust inflation forecasts?
In the latest instalment of Simply put, where we make macro calls with a multi-asset perspective, we argue that inflation forecasts have become irrelevant in a volatile inflation environment and suggest more attention should be given to the components behind the overall figure.