What Will the Next Half of 2022 Look Like?

The market in 2022 has been so volatile that predicting the next half would probably require an oracle. Despite the volatility and unforeseen circumstances market predictions require studying previous patterns and analyzing ongoing events. That said, the current events were undoubtedly cataclysmic with no indications of scenarios changing otherwise. 

As the Russian invasion of Ukraine affected crude supplies in Europe, in another part of the world a recurrence of COVID-19 took the world’s second-largest economy by the horns leading to lockdowns. These issues have had a deep impact on the global supply chain. With half the world’s economy experiencing shortages in several sectors. 

Additionally, the U.S. economy had a setback with the unwavering inflation hitting the economy hard. The increase in the interest rates additionally led to fears of recession. 


The Stock Market and Global Economy
As the grim reaper continues to cast his shadow upon the stock market, the remaining half of 2022 will continue to be dismal. The increase in inflation and rate hikes by global central banks have led to an impending recession. As the factors that lead the stock market to plunge to its lowest remain consistent the second half is bound to see the stock markets mirror its previous experience. The first half of 2022 can be characterized by a bear market territory and prolonged selloffs. 

Looking at the major investments gives us a picture of how bad the situation has been. On one side as S&P 500 closed at a loss of 21%. Several economists predict the remaining months will see S&P 500 stocks end even lower.  On the other hand, the crypto world was down with Bitcoin falling 60%. Similarly the safest heaven for investors, gold also fell more than 4%.

Moreover, economists have predicted a rise in U.S. treasury yields. As investors might latch toward risk-free equipment a surge in equity risk premium is bound to happen. The continued drop in the stock markets will be carried on to the next half of this year. 


Fixed Incomes

As I write this blog, we await the results of the U.S Federal meeting to conclude and announce the interest rates for the month of September. Professional investors have kept a hold of their breaths as the market has been substantially uncertain. Though the increase in rate hikes is meant to control inflation however it has led to the worst monster, The Recession.

However, it is expected that returns on fixed incomes will improve thanks to an increase in rate hikes. As the upcoming months indicate interest rate hikes in several economies, it is evident that growth in the economies will slow down. This will lead to a much flatter yield curve with increased volatility. 


Final thought

Depending on how effectively the U.S. federal authorities manage to tame the inflation, the recession might have a deep impact on consumer sentiment. The more important question to focus on at moment is the impact of the recession rather than its timing. 

It all falls down to how as investors you can benefit from a situation like this. As the market continues to be bearish sentiments, investors can strategize accordingly. Bear markets isn’t always bad news however the volatility in the market is the real culprit. The back-and-forth pull within the market underlines the significance of staying nimble. Investors can adjust asset allocations accordingly to stay on the safer side.  

Moreover, inflation has its pros (more cons though), a more-than-average inflation as a result of the war is an expected impact. inflation is not just a ‘can be good sometimes’ result, but it’s also necessary for any economical growth. Inflation motivates individuals to invest in new economical activities. 


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