Whilst inflation continues its downward trend, hopes for easy monetary policy have begun to fade. The strength of developed economies and, in particular, the US jobs market has led to a “higher for longer” mantra, so whilst the Federal Reserve might not look to hike rates much more, they are also unlikely to cut rates soon either, certainly not while inflation persists at high levels and potential for inflation remains high. It should be noted that much of the recent revival in risk sentiment was led by China’s “reopening”, and the country has been in a quiet period insofar as economic reporting goes (data for January and February is expected in March).
The waning risk sentiment amidst higher interest rates hurt Real Assets, although these have been year-to-date outperformers, the worst performance in February was seen in commodity-exposed equity regions and sectors. Follow the link below for more detail on events that transpired in the month.
