The Tilney Investment Outlook - June 2022
Stock markets: not jubilant, but some signs of improvement
This monthly commentary gives a roundup of global markets and trends.
In this edition:
- Financial markets retain a cautious tone with equities and bonds dragged lower by accelerating inflation and rising interest rates
- The market uncertainty has seen a significant sector rotation, lower valuations and higher bond yields. Mega-cap US equity and long-dated government bonds have been hit particularly hard
- Asset managers have lifted their cash level to the highest level for 21 years [1]. There is now a risk that equities overshoot on the downside
- Much will depend on whether the Federal Reserve can engineer a slowdown in inflation without causing a recession. History is not on its side, with a ‘soft landing’ only achieved in three out of 12 previous tightening cycles [2]
Sources
[1] BoFA Global Fund Managers Survey, If they can’t rally now, 17 May 2022
[2] The Fed’s Soft Landing Play, Gavekal, 10 May 2022
Disclaimer
This article was previously published on Tilney prior to the launch of Evelyn Partners.