Special Edition: 2022 Credit Conditions
Welcome to a special edition of?Essential Economics! This week we share the forecasts and insights from our just-completed Credit Conditions Committee round: “Aftershocks, Future Shocks, And Transitions.” The ongoing global rebound has been surprisingly robust, with demand outrunning supply, leading to an unexpectedly large uptick in inflation. The debate is now whether inflation is persistent or not (the adjective “transitory” has been retired). The COVID-19 virus is still with us, as the Omicron variant illustrates, although the economic impact of the virus has been declining. Turning to the numbers, GDP growth forecasts are broadly unchanged with very strong numbers for the US and Eurozone this year. On the credit side, Global Research Head Alexandra Dimitrijevic and team note that with favorable financing conditions prevailing and a powerful economic rebound under way, we enter 2022 with largely positive credit momentum. Our macro and credit teams share a top risk: persistent inflation, which would push central banks - in particular the Fed - to tighten monetary policy settings sooner and perhaps more aggressively than expected, potentially triggering significant market volatility and risk repricing.
Global Macro 2022: Rising Inflation Fears Overshadow A Robust Rebound
In my 2022 economic outlook report I argue that the global economy is in the midst of a robust but uneven rebound from the pandemic, with demand growth outrunning supply growth and inflation rising quickly almost everywhere. COVID-19 is still with us, but the economic impact of the virus is weakening, at least for now; the new omicron variant is a wildcard at this juncture. Our GDP growth forecasts for 2021-24 are broadly unchanged.
Persistent high inflation requiring an unanticipated policy adjustment – particularly in the US - is now the main macro risk for 2022
To read the full document, click here .
I shared our latest macro forecasts and narrative with the On The Move team at Yahoo Finance, where we discussed the possible impact of the new Omicron variant, monetary policy challenges and the overdue retirement of the adjective “transitory” when describing inflation.
To watch the interview, click here .
Global Credit 2022: Aftershocks, Future Shocks, And Transitions
Alexandra and team argue that with favorable financing conditions prevailing and a powerful economic rebound under way, we enter 2022 with largely positive credit momentum. Still, new COVID variants could undermine confidence and recovery prospects. The weakest areas of credit markets—particularly highly leveraged corporates and some emerging markets—are most exposed.
Orderly reflation could be derailed if persistent inflation pushes central banks to aggressively tighten monetary policy, triggering significant market volatility and repricing.
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To read the full report, click here .
Alexandra appeared on Bloomberg Daybreak to discuss the global credit outlook including investor risk appetite, monetary policy, leverage loans, ratings distributions and our default rate forecast.
To watch the interview (which starts at 28:40) click here .
For Deeper Dives, Check Out Our Full Suite of Outlook Reports
Regional Macro Economic Forecasts
Regional Credit Conditions
Webinar: 2022 Credit Outlook – Aftershocks, Future Shock, Climate and Energy Risks
We bring it all together in our upcoming Credit Conditions webinar to be held on Friday, December 3 at 9am NY EST/2pm GMT). I will join our senior credit analysts to discuss the 2022 macro-credit outlook and risks.
To register for the free webinar, click here .
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2 年Thanks for sharing