Mercer's 2022 mid-year inflation outlook

Geopolitical turbulence, volatile markets, tightening financial conditions and sharply rising global inflation have defined the first half of 2022. Central banks’ fight with inflation will slow economies down. The question is whether that leads to a soft landing or a hard landing. We lean towards the former rather than the latter, although acknowledge that the range of outcomes is larger than normal given the unprecedented events in recent years.

 

In our central case of a soft landing, we believe certain growth fixed income segments offer value while we believe the outlook for equities is more balanced with a slight favor for small-caps. We are neutral on sovereign duration. In currencies, we see opportunities in Japanese yen as a hedge against possible recessionary outcomes.

 

Download the attached report for more detailed commentary.

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