What’s Behind the Market Volatility, and What We’re Watching Next

Key insights 

• The volatile start to the year in financial markets is set to continue for a while yet.
• Fed hikes, surging inflation, a post‑pandemic repricing in stock markets, the Chinese economy, and the Ukraine‑Russia border dispute have the potential to disrupt markets.
• Steering a course through this environment will be very challenging, but market volatility and sector rotation should present good opportunities for active investors.

The volatile start to the year in financial markets is unlikely to abate soon. Sustained inflation, a looming Federal Reserve (Fed) rate‑hiking cycle, tightening liquidity conditions, and the unwinding of pandemic‑era economic distortions—among other factors—mean that further price fluctuations can be expected.

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