Perspectives edition 2021/09 (2021/09/29)
Clear & concise
- The economic recovery is set to lose some momentum but to last longer as a result;
- Though inflation will spike further initially, inflation pressure should prove temporary;
- Where Covid-19’s risk for the economy is waning, other risks are on the rise;
- Rising bond yields have helped to resolve the interest-rate conundrum;
- Though short-term corrections are likely, we remain constructive on risk assets.
Video: An espresso with Jürgen Michels
During the summer, the interest-rate conundrum partially resolved itself as a result of an updraft in longer-term yields once technical factors had dropped out of the equation. This process has been supported by the Fed’s widely-expected tapering announcement and by other central banks’ reflections about normalising their monetary-policy stance. With coronavirus-related restrictions gradually lifting, the global upswing is progressing and bonds yields are climbing moderately. The latest developments in China demonstrate, however, that there are further risks besides Covid-19 which could disrupt this trajectory.
Although the second coronavirus-ridden autumn in the northern hemisphere began with a rising tally of infections, health-care systems have not been overstrained in countries with high vaccination rates. Indeed, restrictions have even been further loosened in many places. Even though the risk of a renewed escalation has not gone away, the epidemiological situation will probably...