See what Robert Jeffree's market views are for the next 12 months
Our Chief Investment Officer, Robert Jeffree, shares his observations of the past 12 months and looks forward to what we might expect in markets over the rest of 2021 and beyond.
The past 12 months have been a unmatched period, rocking everyone’s lives. This has had a knock-on effect on financial markets. As the world battled the Covid-19 pandemic, different regions managed the situation in their own ways, and we saw a divergence in economic activity and stock market performance.
The reopening of developed economies in the summer was short-lived as many countries battled second and third waves of the virus. Meanwhile, much of Asia remained relatively unscathed as many countries managed the pandemic more successfully.
As we rolled forward into 2021, many countries around the world ramped up their vaccination rollout programmes in the hopes of supressing the spread of the virus and allowing economies to reopen once again.
The International Monetary Fund has forecast global output to increase by 6.0% in 2021 and 4.4% in 2022. For what was previously a low economic backdrop this is a dramatic growth spurt, driven by an expansion in government stimulus and resumption of consumer spending.
Clearly this is good news, but will likely be accompanied by a short term rise in inflation as central banks keep rates low and the base effects from weak commodity prices in the first half of 2020 feed through to the numbers. However, we believe any inflationary spikes will be short lived.
Conditions in fixed income markets are likely to remain challenging. The recent sell-off in government bonds reflects concerns that an economic boom could reignite inflationary pressures. Yields are low and this means returns available to new buyers of bonds are slim. However, the protection afforded by high quality government bonds in times of volatility means they remain an important part of our portfolios.
Overall, we remain confident about the economic outlook and positive on equities. As this year has shown already, it pays to stay fully invested through stock market cycles. As the old adage goes – it’s time in the market, not timing the market, that matters in the long run.
