2022 is not very old and already it has seen a stock market correction, a 50bp flattening of the US yield curve and a major geopolitical crisis in Europe. Investors are contemplating the potential consequences of the Russian invasion of Ukraine, and the direct economic impacts here are minor as the world’s trade and financial linkages with Eastern Europe are very low. However, the indirect impact through higher commodity prices (energy, metals, and food) to consumer’s purchasing power is far more significant and simply adds more impulse to already well-established upward trend in global inflation, as well as downside risks to growth.
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