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Weekly comment: Uncertainty leads to inflation fears

Date: 13 December 2021

Weekly podcast: Market overview

This week’s host, Investment Manager, Daniel Jolliffe discusses the ups and downs of the past week with Head of Fixed Interest Research, Richard Carter. Among the topics discussed – inflation, interest rates, Russia, Evergrande as well as what markets will focus on next.

Market overview – Alan McIntosh, Chief Investment Strategist

The seriousness of the new Omicron Covid variant is well reflected in the UK government’s announcement on Sunday evening that all adults over the age of 18 can have a booster jab by the end of this month. With cases potentially doubling every two to three days, the risk of overwhelming the NHS is very real. Even if the percentage of hospitalisations is less than with previous strains of the virus, it is the sheer speed of transmission that is the worry. On a more positive note, data is emerging that three jabs should give over 70% protection from symptoms, hence the urgency of the booster programme.

Friday saw the latest inflation data from the US, with CPI rising by 6.8% year on year,  the highest level since 1992. Bond yields barely moved given that the number was as expected. However equities saw this as a positive and continued the week’s rally, allowing the main US index to close at a fresh all-time high. The four major central banks all meet this week to decide on policy, so we should have a fairly clear idea as to the path of monetary tightening into 2022 by Friday. The Bank of England, seen as the likely first to raise borrowing costs, is expected to hold off to the New Year, given the fresh Covid related restrictions introduced by the UK government last week.

Speakers

Alan McIntosh

Chief Investment Strategist

Daniel Jolliffe

Investment Director
Richard Carter

Richard Carter

Head of Fixed Interest Research

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