What will happen in 2022 after the moves of the Fed and the ECB
Macroeconomic forecasts for 2022 after the latest Fed and ECB decisions. The analysis by Paolo Mauri Brusa, manager of the Multi Asset Italia team of GAM (Italia) SGR
What we are about to close is a 2021 which, from the point of view of investments, has certainly not disappointed. The arrival of vaccines has allowed the resumption of economic activity and above all of consumption, making it decisive. Just as decisive were the expansionary policies of the major Central Banks and the aid programs implemented by all the main economies. After the weakness of the last week, the equity markets have returned to their highs and are packing, in view of Christmas, a double-digit performance generated with an average low volatility. The S & P500 has had a handful of corrective phases this year that have never gone beyond -6% and the Vix has tended to be below 20%. More generally, all the lists of the developed countries have grown a lot with the exception of Japan, negatively affected by the difficulties of China. However, if we analyze the results of the indices more in depth, we realize the enormous dispersion at the sectoral level which creates a misleading optical effect as never before in the last two years. Looking at the Nasdaq, certainly the most striking example, if we remove the contribution of the 5 main stocks from the overall performance of more than 20%, what remains is a much more modest 6%. This is a symptom of a recovery that is far from generalized and that still presents many weaknesses today.
It is worth remembering that the extremely low level of interest rates, although obviously not the only reason, has played a key role in the rush of the markets. But the 2022 opens with big news, the end of the tapering part of the Federal Reserve. As expected, given the recent improvement in the job market, Powell has also decided to speed things up by putting an end to the monthly purchases of Treasury and MBS as early as next March. Estimates from FOMC members indicate three rises in 2022 and three more in 2023, as the markets have already been pricing for a few weeks. Powell, however, reiterated once again that, in the event of changes in the macroeconomic or pandemic framework, the Fed will be able to retrace its steps at any time. The real unknown for next year will be precisely linked to the ability of the American Central Bank to stem inflationary pressures without having an excessive impact on economic growth and without creating imbalances on the financial markets. In addition to the correct calibration of the rises, the effectiveness of communication will be crucial, an area in which the Fed has had some missteps in the past. But we will worry about this later, for now we look with cautious optimism to the future. Meanwhile, Santa Powell has finished decorating the tree.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/cosa-succedera-nel-2022-dopo-le-mosse-di-fed-e-bce/ on Sat, 01 Jan 2022 06:40:18 +0000.