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Monetary tightening, no recession: Market Commentary April 2022

18 April 2022

MARKET CONTEXT: Monetary tightening, no recession

Global Macro:  

Financial Markets:  

We expect central banks’ tightening monetary policy, the war in Ukraine, and China’s Covid restrictions, to keep volatility high in the months to come.

Equity: In March, the S&P 500 and Nikkei 225 gained 3.8% and 3.6%, respectively, while the HSCEI fell 6.2% and the Euro Stoxx 50 edged down 0.6%. Fixed Income: The 10-year US yield jumped 49bps to 2.33%, which contributed to the continued sell-off in Emerging Market government bonds (-0.9% in USD; -1.2% in local currencies) and High-yield corporate bonds (-1.2% in USD; -1.7% in EUR). Currencies: With respect to USD: EUR -1.3%, AUD +3.1%; CNY -0.5%; safe-haven JPY -5.9%, CHF -0.7%. Commodities: Gold went up 1.7% while oil prices rose 5.2% amid growing supply fears triggered by the war in Ukraine.