Ready for a new regime: 2022 EMEA Implementation Guide

Ring in the new.

We are entering a new market regime unlike any in the past half-century: we see another year of positive equity returns coupled with a down year for bonds. It’s rare for global stock returns to be positive and bonds negative in any one calendar year and two years in a row has never happened in nearly five decades. That’s what signals that we have entered a new market regime and why it’s important to cut through the confusion sparked by the powerful restart, new virus strains, supply-driven inflation, and new central bank frameworks. Our main scenario: virus strains delay but don’t derail the restart, central banks start to raise rates but remain more tolerant of inflation, and inflation cools to settle above pre Covid trends. Such a backdrop favours equities over fixed income, but we have dialed back our risk-taking, given the wide range of potential outcomes.

How can investors get ready for the new regime? In our 2022 Implementation Guide, we focus on the key investment themes laid out in the BlackRock Investment Institute’s Global Outlook, with implementation ideas across alpha seeking, index, alternative, and money market funds.