Crystal Ball: What global brokerages are forecasting for 2022
Manulife Investment Management – Disruptive tightening and China key risks Monetary policy—Global central banks are sounding more hawkish—U-turns from the Bank of England (BoE), policy adjustments from the European Central Bank (ECB), a Bank of Canada (BoC) that’s actively tapering, and a U.S. Federal Reserve (Fed) that’s set on winding down its asset purchase program. While our base-case expectation is that the market will be able to absorb these tightening measures if they’re implemented gradually, it’s still worth noting that: • Global liquidity is declining, which has historically been problematic for growth • If real interest rates climb too quickly, it can derail the equities market (as it traditionally has done), particularly as rates approach 0% • The current environment creates scope for policy miscommunication that could create volatility in global interest rates and currency markets The downside risks in the coming quarter are most concentrated in China, wher...