Missed our Q2 2021 Scenario Webinar? Access it here
26 July 2021
If you were unable to attend our Q2 2021 Scenario Webinar on July 22 – The return of inflation and the frequency domain toolkit for economic modeling – you can access the presentation, the recording, and the Q2 Economic Outlook here. Download the presentation via the form on this page.
Our quarterly outlook is based on the Ortec Finance Economic Scenario Generator and offers our perspective on recent developments in the global economy and capital markets and what these mean for the future.
Gain expert insights into future economic and financial market developments with our Q2 Economic Outlook.
Get the latest news and an in-depth analysis of the key drivers of risk and return.
Q2 Economic Outlook highlights include:
In the second quarter of 2021, economies have started to reopen against the background of the accelerated vaccine rollout. On the downside, the rapid spreading of the Delta variant is a source of concern.
Equity markets reached new all-time highs as investors anticipate a continuation of the economic rebound. Going forward, the Ortec Finance Momentum Indicator signals equity market momentum to fade in the coming year.
Stronger than anticipated economic growth combined with inflationary pressure, especially from rising commodity prices, worsens the outlook of the Ortec Finance Business Cycle Indicator. This leads to lower expected equity returns and higher credit spreads on a 1-3 year horizon.
Although we do recognize the risk for higher inflation, in line with central banks, we expect the recent spike in inflation to be transitory as supply chains need time to adjust to excess demand.
Due to lingering uncertainty about the Delta variant as well as inflation risk, we expect market volatility to remain elevated over the one-year horizon.
This blog post explores three approaches to measuring the impact of liabilities on SAA: actuarial simulation, replicating portfolio, and product-based dynamic liability modelling. It also compares the advantages and disadvantages of each approach in terms of accuracy and runtime efficiency, highlighting the benefits of a dynamic liability modelling approach as a fast, flexible, and efficient solution for multi-scenario SAA analyses in a full ALM context.
Creating inflation-resilient portfolios through private assets
Inflation-protected portfolios typically provide a combination of diversification benefits and return improvement. For example, by diversifying to “real assets”, like commodities, direct real estate ...