Market Notebook

Global equities came under significant pressure last week while bonds mounted a recovery. 

Price action in equities and bonds appeared to indicate that market participants were primarily concerned with the prospect of slowing growth and were less concerned about inflation. The most likely catalyst for such thinking is the appearance of Covid variant Omicron. Should Omicron prove to be as or less worrisome than the Delta variant, bonds could come back under pressure as inflation concerns move back into focus. Regardless of Omicron, equities could remain under pressure as market participants weigh the potential for slowing growth moving into 2022.

Risk instruments got beaten up last week, and it is possible such price action could continue. If prices continue to slide, a host of great equities will increasingly become attractive to buy should their prices dip far enough. As prices decline, there are deals to be had for long-term investors. To find the silver lining in pullbacks, know that investors can offset the psychological pain of holding existing investments that are underwater with the knowledge that new instruments can be purchased “on-sale.”

All the best in the week ahead!