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Article | Global Markets Overview

Global Markets Overview: February 2021


By David Hoile | February 26, 2021

Tracking recent asset price moves and our outlook

Our Global Outlook

Key Points

  • Investor optimism over US growth prospects is being reflected in rising medium and long term inflationary expectations;
  • We believe that US inflation will rise in 2021 to moderately above Federal Reserve target levels but not to disruptive levels. High levels of unemployment and spare capacity in many business sectors will keep wage growth and other aggregate inflationary pressures in check over the medium term in our view;
  • What are the key market-related themes we think investors should focus on to position themselves for success during 2021 and beyond? From a macroeconomic perspective, we think three themes stand out:
    1. Policy shifts: The post-COVID policy regime has shifted in important ways. Whilst much of this shift was evident before 2020, the policy response to the pandemic has accelerated it. This has important implications for return pathways and downside risk management in particular
    2. The rise of China: China’s financial system continues to open, which has material and near certain implications for the sources of diversity open to investors and how downside risk can be managed;
    3. Sustainability: This encompasses three important topics: climate; inclusive growth; and stewardship. In order to manage these imperatives, the need for better practices by governments, regulators, corporates, asset managers and asset owners is clear and growing.
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Senior Director, Investments

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