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Vantage Point - The Inflation Question

Welcome to another edition of Vantage Point. In our last report, we argued the outlook for 2021 depended on whether the ‘bad news’ about new virus strains or the ‘good news’ about vaccines dominated this year. So far, the ‘good news’ appears to be winning and our focus has shifted to the outlook for inflation and its impact on monetary policy. We cover this reassessment and its impact on markets and investment conclusions in our new Vantage Point.

Monthly Market Roundup


APRIL 2021

Improving Outlook

  • Global stocks advanced 2.7% in March following 2.4% the prior month bringing the YTD gain to 4.7%.
  • Despite a 34 bp increase in the US 10-year Treasury to 1.74%, the S&P 500 rose 4.4% and is 6.2% YTD.
  • The YTD 82 bp gain in the US 10-year Treasury is the highest three-month move in four years and led to the steepest yield curve in more than five years as the 2-year Treasury was only 3 bp higher.
  • Front-end rates continue to be pinned down by easy policy as the Fed indicated it expects rates to remain on hold during the next couple years and that the uptick in inflation would be temporary.
  • As the Fed has brushed off inflationary concerns, the disconnect between the market’s view has grown.
  • Signs of higher inflation pressure continue to increase and both consumer and market estimates are at multi-year peaks.
  • So far, elevated savings combined with the additional stimulus, increased pace of economic reopenings, the vaccine rollout, strong earnings, and easy financial conditions have supported markets with the pickup in rate volatility.
  • Overall, the risk to yields remains higher as the US 10-year yield is still the lowest amongst major developed economies relative to the level on January 1, 2020.
  • We expect bond market volatility to continue driving relative equity performance and markets to remain sensitive to any shift forward in the Fed’s tightening outlook and to higher real rates.
  • With expectations of a cyclical recovery in the 2H, we remain our bias to value and cyclical stocks and beneficiaries of the reopening in the consumer, travel, and business services sectors.
Find out more

MARCH 2021

Changing Risks

Despite a slight pick-up in volatility towards the end of the month, global stocks gained 2.3% in February bringing the YTD return to 1.9%.



Positive 2H Outlook Still Intact

Global stocks experienced the first monthly decline since October and fell by -0.4%.


Points of View

What’s priced into markets?

Household savings and corporate cash: igniting growth post Covid-19?

The global economic recovery remains uneven across regions and sectors but financial markets were buoyant over the last months of 2020 and have started 2021 strongly.


Read More

Inflation: Is It Coming Back?

Probably not in a big way, but if it were to it would change the investment landscape completely.


Read More

Global Economics and Investment Analysis Group

Meet the minds behind the research.

Shamik Dhar

Chief Economist


Alicia Levine, PhD

Chief Strategist


Lale Akoner

Market Strategist


Bryan Besecker, CFA®, CAIA

Market Strategist


Sebastian Vismara

Financial Economist