Since peaking in 2021, global bonds have suffered phenomenal losses in 2022. Talks of inflation seem to be resurfacing louder than during the pandemic years with the U.S. Federal Reserve and EU Central Bank talking about tightening policy to combat inflation.
Famous billionaire investor Carl Ichan is also worried about the developments and is protecting his portfolio against a possible sell-off in the market. “I think there very well could be a recession or even worse,” Ichan said on the Closing Bell Overtime on CNBC.
Recession indicators flashing
The U.S. Fed recently stated that they are about to embark on a more aggressive cycle of interest-rate hikes. This statement has led the 10-year yields to surge to 2.5% bursting through a ceiling level it had held since the 1980s.
Europe’s Stoxx 600 advanced while the S&P 500 and Nasdaq 100 contracted with investors keeping an eye on Russia’s war in Ukraine. The picture painted by these developments is one of a pause in the stock rally from war-induced lows.
Suppliers of key commodities are still disrupted with supply chains being stretched. The EU area predicts that median inflation numbers will be around 6.7% while the highest estimate stands at 7.7%
How to position properly
In times of distress with energy prices, commodities, and surging food costs investors may be tempted to pull the plug on their investments and sit on the sidelines until more favorable market conditions come around.
Finbold reported on why a famous investor is betting big on energy, how to relocate into renewable energy, as well as how to reposition around rising food prices, all of which are worth taking a look at in light of the present macroeconomic situation.
The investing environment is more challenging today than it has been in the past couple of years due to rising inflation and geopolitical tensions. However, investors need to stay calm, keep an eye on developments, and stick to their investment strategy to ensure the best returns for their portfolios.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.