Global Markets Overview: September 2021

In this month’s Global Markets Overview:

Key Points for September

• Central bank tapering moves into focus. In reference to the extremely large quantitative easing undertaken in response to the pandemic, in June 2020 Jerome Powell, U.S. Federal Reserve Chairman, emphatically stated “we are not even thinking about thinking about tapering.” A little over a year later, things have changed, and now the Fed and other central banks are not only thinking about tapering, but in some cases starting it as well.
• In the U.S., Mr. Powell has said the Fed might start reducing its large monthly purchases of bonds this year, with rate rises some way distant. In the Eurozone, the ECB’s has begun to reduce its pace of bond purchases, albeit only through the emergency pandemic programme. Bond purchases are also being tapered in Australia amongst other places.
• These moves reflect the strong sequential economic growth and high inflation rates observed in recent months. Our central view is this pressure will continue; another reason why we think very low bond yields have upside risks.

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Author

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David Hoile

Global Head of Asset Research at WTW

David is the Global Head of Asset Research at WTW, responsible for economic and capital market research. He also is a member of the Investment Assumptions Committee, who help guide investment policy globally.

email Email phone +44 20 7170 2144

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