The fourth finews webinar in collaboration with Bank Syz focused on economic developments in the second half of 2021. Is inflation and thus a rising rate turnaround looming? What does that mean for the stock markets? Adrien Pichoud from Bank Syz and Mark Haefele from UBS explored these questions.
With vaccination programs in many countries around the world, the recovery of the global economy has gained sustainability. Therefore, it is not surprising that inflation, which was not an issue at all for many years, has now become the order of the day. With inflation inevitably comes the concern of rising interest rates, which in turn would have an impact on financial markets.
These were the topics covered in the recent finews webinar in collaboration with Bank Syz. Here, Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, and Adrien Pichoud, Chief Economist at Bank Syz, discussed with finews founder Claude Baumann.
The current environment remains positive for assets linked to global growth, the two experts agreed. In the U.S., upside potential is limited in the near term, as stimulus and growth have already peaked and valuations already reflect this brightening on the economic horizon, Haefele said.
Take Profits?
As a result, it makes sense to take profits on some positions to lock in some of the impressive returns achieved since the March 2020 slump, he added. Cyclical markets such as the eurozone and the U.K., or sectors such as financials or basic materials, on the other hand, still have upside potential, he said.
Overall growth and inflation dynamics are unfavorable for fixed income, Pichoud noted, as long-term interest rates are expected to rise for all maturities. As bond yields continue to trend higher, gold appears to be a more attractive alternative in portfolios as it could benefit from the increase in inflation concerns.... as long as the U.S. Federal Reserve maintains its current expansionary monetary policy, Pichoud stressed.
