Investors continued to focus on rampant inflation and, in turn, potential changes in monetary policy settings.
By month end, five interest rate increases in the US had been priced in to markets; a more aggressive tightening in policy settings than had been anticipated previously.
These evolving expectations saw bond yields rise in all major regions – resulting in negative returns from fixed income markets – and
spooked share markets. Major equity indices in the US, Europe and Australia all closed January substantially lower.
The global economy is being shaped by conflicting triggers. These include productivity-boosting technology innovations, geopolitical tensions and the strident efforts of central banks to bring inflation under control. We examine the economic outlook and discuss the implications for your retirement savings.
With inflation coming off the boil, there was optimism that borrowing costs have peaked and could be lowered later this year. In turn, this could be beneficial for corporate earnings.
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