Investing in high inflation environment [Video]

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Major US indices remained slightly offered yesterday, as the IMF cut its global growth estimate from 6% to 5.9% in 2021, while leaving the expectation of a 4.9% growth for 2022. The US growth forecast has been lowered from 7% to 6%, mainly due to supply chain constraints.

The supply chain constraints seem to be getting worse at some places, but better in others. Apple faces important decrease in iPhone production and could cut the production target for its iPhone13 significantly in the last quarter. It is also said that Apple, which came out of the Chinese crackdown measures quite unharmed so far, could now see the pressure increased.

Elsewhere, the supply chain constraints, and the rising oil prices continue fueling the worries of a longer and stickier inflation in the US and elsewhere.

Due today, the US CPI data will reveal how bad the 13% rally in US crude prices impacted the consumer price inflation in September.

Also due today, the latest FOMC minutes will likely reiterate the Fed’s willingness to start tapering the bond purchases soon and could give a further insight regarding the need and the possibility of seeing the rate normalization happen before 2023.

We lately started seeing an acceleration in the US 10-year yield, which is now above the 1.60%, and a strong inflation figure could further boost the yields and weigh on equity appetite.

Banks think that 60-40 portfolio allocation is no longer a good idea in the rising inflation environment, and propose different alternatives!

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