• This acceleration could foster economic dynamics and market conditions that look quite different from those of recent decades.
  • The recovery is likely to spur faster economic growth, higher interest rates, and accelerating inflation — closely interrelated forces that can have meaningful impacts across asset classes.

The world is finally beginning to move beyond COVID-19 thanks to the steady rollout of effective vaccines. While the pathway back to normal is not expected to unfold in a smooth, straight line, especially given recent outbreaks in various regions and uneven distribution of available vaccines, the overall direction seems clear. In our view, the world is entering what will likely be one of its strongest economic recoveries since World War II — and that could foster economic dynamics and market conditions that look quite different from those of recent decades.

Preparing for future possibilities

The impending recovery is likely to spur faster economic growth, higher interest rates, and accelerating inflation. Historically, these forces are closely interrelated and can have meaningful impacts across asset classes. We constructed a post-COVID-19 “road map” to help investors think about and navigate financial markets in the quarters and years ahead. To keep things simple, we categorized asset classes at a very high level (equities, fixed income and inflation-favored) and we focused most closely on three relationships that we think are fairly intuitive:

  • Faster economic growth and equity markets 
  • Higher interest rates and fixed-income markets
  • Accelerating inflation and inflation-favored assets

Download this commentary to get the road map and read more. 

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