Key Takeaways
The SVB Asset Management Economic Report is a quarterly review and outlook on economic and market factors that impact global markets and business health.
01 The economy is on track for recovery
A strong labor market and continued support from accommodative monetary and fiscal policy has facilitated consumer activity.
02 The Fed has shifted to a more hawkish policy tone
Expectations call for three rate increases in 2022 and several more in upcoming years.
03 Inflation concerns and supply/demand imbalances remain
As inflation heads up, the outlook for the US dollar becomes murkier.
Inflation
The December 2021 year over year Core PCE rose 4.9%. The Fed expects inflation to decline in 2022.
Short-end interest rates
A hawkish tilt for the Fed has pushed short end rates higher as rate hikes are expected in the near term.
Global central bank expectations
The market expects liftoff for the fed funds rate in the US to be early in 2022, while other central banks will likely preserve a more accommodative policy through 2025.
Global and domestic bond yields
Global bond markets were mixed as high-grade sectors are poised for higher rates in 2022. The high yield sector outperformed.
Written and researched by SVB experts
