Modest Market Returns in the Past Week as Inflation Pressure Persists
- Modest returns in both the bond and equity markets in the last week
- Growth remains robust, with little evidence of a recession in any part of the world
- Inflation pressure persists
- Central banks are likely to continue tightening, which presents a significant risk for markets in the next three to six months
Gary Dugan
The Global CIO Office
Last week was relatively quiet in both the bond and equity markets, with only modest returns. However, it’s important to keep an eye on current events.
Inflation data has been strong at the core level, despite some headline rates falling. In countries like the UK, inflation remains in the double digits, while in Europe it’s just under 10%. The core inflation rate in the United States is close to 5%, rather than the central bank’s target of 2%.
Additionally, growth remains robust, and there is little evidence of a recession in any part of the world. Confidence data from the manufacturing and service sectors in the United States and Europe were positive, and China’s GDP saw double-digit growth in the first quarter of this year.
However, inflation pressure persists, and central banks are likely to continue tightening, which presents a significant risk for markets in the next three to six months.
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