Market Compass February 2022
- Fed tightening will start in March. Compared with the previous rate hiking cycle it will be less predictable, more data-dependant, and possibly faster.
- We still expect the unfinished global recovery and decent earnings growth to support risk assets. Yet two key risks are materialising: a tougher Fed and rising energy prices. We scaled back our Equity overweight.
- In Fixed Income we retain an overweight in Credit given residual ECB support and resilient fundamentals; we stay UW long-dated Govies.
- The USD will continue in the short term to enjoy the support from higher US rates, but we expect a reversal later this year.