High valuations and rising interest rates = Volatility

This year has started with quite the kick to investors’ solar plexus. Bond yields have jumped, and equity markets have dropped. Not a good beginning to 2022 for either asset class.

As the chart below shows, for the first time in a generation there is some inflation out and about in the global economy.

Not since 1982 have annualised US consumer price inflation rates been as high as 7.3%. 

Inflation has arrived, after a 40-year absence