Latest news:

“The markets can absorb the interest-rate hikes in the U.S., which are being discounted”

Dec 14, 2021

Redacción Mapfre

Redacción Mapfre

The U.S. bond market is already discounting three interest-rate hikes in 2022. Ismael García Puente, fund selector at MAPFRE Gestión Patrimonial, acknowledges that the market has been quite erratic in response to, for example, Jerome Powell's reelection or the appearance of the new omicron variant, “but now it believes the Fed will act quickly to prevent inflation from becoming an endemic problem for the economy.” And in fact, short-term interest rates have risen more than long-term rates, flattening the yield curve, while inflation expectations have remained stable. "If there are no surprises in terms of inflation, the market can absorb these three interest-rate hikes without a problem," he adds in his weekly talk on Negocios TV.

Monetary policy in Europe is also attracting attention. This Thursday, the European Central Bank (ECB) may determine what happens with the Pandemic Emergency Purchase Program (PEPP) and whether it finally ends this aid in March of next year. "We think it will expand the previous program it had been using to buy assets because the ECB wants to give itself a lot of flexibility due to the existing uncertainty." Of course, he warns, a situation may arise in which, for the first time in seven years, there are more bond issues than redemptions and purchases by the central bank, "and this can be dangerous, mainly for the periphery."

In the final stretch of the year, analysts are updating their forecasts. García Puente believes that in 2022 we will begin to see the effects of the arrival of Next Generation funds, "which may benefit European equities." As for sectors, he is betting on the real estate sector, for example, the German residential market, and on green energy, "the topic that we feel the most comfortable with.”

High volatility in stock markets: why it happens and how to act

High volatility in stock markets: why it happens and how to act

In recent weeks, international markets have faced their most challenging period since 2020. In a situation marked by surging volatility, emotions like fear take center stage in the minds of many investors, and market movements shift from linear to exponential. Such situations, although not frequent, do tend to recur periodically, and it’s important not to get swept up in the negative atmosphere or act impulsively with a short-term mindset, as the experts at MAPFRE remind us.

The dollar's hegemony under scrutiny

The dollar's hegemony under scrutiny

The US dollar’s role as the world’s reserve currency, historically underpinned by institutional credibility, financial depth, and trade dominance, is now facing mounting structural challenges that go beyond short-term economic fluctuations.

The tariff war shakes the global economy and casts doubt on U.S. debt

The tariff war shakes the global economy and casts doubt on U.S. debt

The tariffs are a problem that’s marking a major shift in the economic relationships we've built and developed over the past few decades. The U.S. President is using them as a tool to bring manufacturing back home and, in turn, boost government revenue through both direct and indirect taxation. But the ends don't always justify the means, and in pursuing these goals, the U.S. is now facing slower economic growth and rising inflation.

Share This