After a strong finish to 2021, the first quarter has been a difficult environment for investment markets with negative returns from share, property and fixed interest (bond) markets.
Persistent inflation data, which in turn requires higher interest rate settings by central banks, has upset markets. While the prospect of higher interest rates can be challenging for valuing assets, markets can quickly recover if the outlook for rates rises are steady and reasonably predictable. At the present time investors are still pricing in substantial interest rate rises and are unsure of exact timing, assuming central banks need to catch-up with the reality of inflation pressures.
Posted: Wednesday 20 April 2022