Asset managers are weighing the impact of upgraded inflation expectations on financial markets, as the Federal Reserve moves up its timeline for interest rate hikes and bond tapering.
Markets are paying less attention to geopolitical risks as focus has shifted to inflation prospects and economic restarts, according to BlackRock Investment Institute.
Markets are “still underestimating” the potential for above-target inflation, according to a recent note from BlackRock Investment Institute.
As Joe Biden’s presidency passes the 100-day mark, fund managers are considering what impact his inaugural period in office will have on financial markets.
Economic restart and greater stability in US bond markets is likely to support investment in emerging market debt, according to BlackRock Investment Institute.
At a meeting of the FOMC last week, the Federal Reserve upgraded its forecasts for US growth and left its accommodative monetary policy unchanged, prompting a resurgence in inflation concerns from investors.
Investors have criticised the UK Budget for missing opportunities to prioritise the green economic transition, as Chancellor Rishi Sunak unveiled the government’s spending plans for the year ahead.
Fixed income funds enjoyed a good year in 2020, with strong investment flows from investors seeking safety in central bank-supported bonds, as the pandemic ripped apart stock markets.
Pandemic-spurred policy “revolution” will continue to drive asset allocations in 2021, says BlackRock
The world’s largest asset manager, BlackRock, has predicted that the “revolution” in monetary and fiscal policy spurred by the Covid-19 pandemic will dampen government bond real yields in 2021. The asset manager favours inflation-linked bonds, as well as risk assets such as equities and high-yield credit.
Institutional investors are taking defensive positions into 2021, as they attempt to cushion portfolios against the long-term impact of the pandemic, including the fallout from government and central bank responses to the Covid-19 crisis.