Global Outlook & Strategy

Each quarter Providence publishes a Global Outlook and Strategy. This is our formal document that articulates our current views of the market and how we are positioning clients’ portfolios accordingly.

July 25, 2022

"Unconditional Commitment" – Global Outlook & Strategy Q 3, 2022

There is a macro regime change underway in economies and investment markets.

After decades of falling interest rates, a declining discount rate, benign inflation, and above trend growth, we are on the cusp of a secular change. Inflation is likely to remain elevated and central banks will be scrambling to ensure this does not become embedded in economies by aggressively raising interest rates.

Jerome Powell, Chairman of The Federal Reserve (Central Bank of the US) said his commitment to fighting inflation is “unconditional”.

KEY POINTS
• Central banks are aggressively trying to tame inflation
• This will come at a cost to growth
• Some “investors” chasing returns have seen large falls in certain sectors
• Markets are pricing in likelihood of a recession in 2023/24
• We are poised but patient

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Global Outlook & Strategy