ALLIANCEBERNSTEIN HOLDING L.P. Rising inflation is troubling bond investors worldwide, but European bond markets will likely experience comparatively weaker inflation pressures and stronger central bank support. Even so, investors in euro markets will need to stay alert and active as 2022 unfolds.
Global economic dislocations and inflation pressures are set to continue into 2022, making for tighter monetary conditions. In the US, where prices have risen at the fastest rate since the 1990s, the US Federal Reserve is accelerating tapering its bond-buying program and will likely begin hiking rates in March and will continue through 2023.
In contrast, euro-area inflation should remain more subdued than the US, with no rate hikes likely by the ECB before 2023. This would leave euro-area bond markets in 2022 with ultra-low rates but probably also low volatility. We expect a mostly supportive background for investors in euro fixed income, with some notable opportunities but also some potential threats.
Global economic dislocations and inflation pressures are set to continue into 2022, making for tighter monetary conditions. In the US, where prices have risen at the fastest rate since the 1990s, the US Federal Reserve is accelerating tapering its bond-buying program and will likely begin hiking rates in March and will continue through 2023.
In contrast, euro-area inflation should remain more subdued than the US, with no rate hikes likely by the ECB before 2023. This would leave euro-area bond markets in 2022 with ultra-low rates but probably also low volatility. We expect a mostly supportive background for investors in euro fixed income, with some notable opportunities but also some potential threats.
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AllianceBernstein Holding LP published this content on 06 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 January 2022 09:17:01 UTC.
