Will hawkish central banks invite much more volatility?

With Russia’s conflict in Ukraine disrupting commodity markets and COVID-19 persevering with to influence provide chains, development was slower, and inflation larger, than anticipated  this 12 months as central banks started to hike rates of interest to combat inflation.

Inflation has additionally been onerous on growth-oriented markets, however Mackenzie expects rising commodity costs might present a lift for producer-oriented nations, resembling Canada, and help relative outperformance in Canadian equities.

That augments different shiny spots Locke noticed on getting into 2022 with North America’s sturdy economic system, low unemployment ranges, important labour demand development, and lots of industries recovering nicely. So, it’s performed nicely, relative to different areas, even with the central financial institution tightening.

“Canada’s orientation towards commodities relative to the U.S. had us positioning in favor of Canada in our authentic suggestions firstly of 12 months in addition to our replace in June,” mentioned Locke.      

As for its third theme, Mackenzie anticipated that China would see renewed development in 2022, however its ‘dynamic zero COVID coverage’ has resulted in additional lockdown and is straining international provide chains.

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