Markets are tricky to navigate these days, to say the least. Both bonds and equities experienced record-breaking worst first trimesters, and even the niches where investors could shield themselves just a few weeks ago, namely commodities and energy companies, have not been of great help of late.
The financial world is in the midst of a painful and unfamiliar transition. After a decade of ultra-low interest rates and what seemed like “quantitative easing (QE) forever”, we are finally seeing a credible tightening cycle from the US Federal Reserve. It is the beginning of the end of the “free money” era.
What separates this attempt to end financial repression from others in the past is that we are operating in a “post-invasion of Ukraine” world. The Russian invasion has sent shockwaves throughout the West, shining a light on its inconvenient dependence on countries that may not always be reliable partners.
