We expect inflation to trend higher across emerging and developed markets and growth to be lower than initially expected, with higher risks for Europe and in particular countries more vulnerable to sanctions and energy price dynamics.
Market Reactions: markets remain highly volatile, with equity markets down but with some recent signs of stabilisation. Oil remains under pressure after the embargo on Russian oil instituted by the US and the UK. Demand for safe-haven assets, such as gold, is still high. Whilst a process of restauration of value is underway (initial repricing initiated prior to the crisis, crisis consequences on European assets then), it is incomplete and fragmented. In particular, it remains to be seen the real life impact of the first stages of “normalisation” confirmed by Fed and ECB. This argues in favour of a bit of patience as the likely additional volatility will offer entry points.