Insights

Capital Flows to Cryptoassets Increase, Despite Volatility

Digital assets saw considerable inflows in recent years as investors searched for alternative sources of return amid excessive equity and bond valuations. We expect this momentum will continue next year as regulators increasingly approve easy-to-access cryptocurrency exchange-traded funds (ETFs). Still, global regulatory challenges persist, and cryptoassets will remain highly volatile until there is more clarity on future regulation.

December 2021

The Dollar Finds Temporary Support

The US dollar tends to appreciate during two broad economic regimes. One is when the US economy is materially outperforming its global counterparts, attracting capital looking to benefit from the superior US prospects. The other is when growth slows sharply, attracting safe-haven-seeking capital. This is the “dollar smile” model of the currency, and looking at 2022 through this lens suggests some dollar strength may be in store.

December 2021

Venture Capital Will Continue to Crush It

Globally, the venture capital (VC) industry will continue to evolve as capital floods in seeking compelling returns that can be had for those willing to wait.

December 2021

Government Bond Yields Are Likely to Rise as Central Banks Remove Support

Long-dated government bond yields rose in 2021 on strong economic growth and surging inflation. Central banks have maintained their easy money policies despite the rapid recovery in economic conditions, likely keeping yields lower than they would have been otherwise. This may soon change now that several major central banks are starting the process of dialing back support.

December 2021

Inflationary Pressures Will Moderate Some in Second Half

Consumer price inflation is above pre-pandemic trend in the United States and Europe, while producer prices are surging seemingly everywhere. Consistent with consensus forecasts, we expect mounting inflation pressures to ease by second half 2022 as demand for goods abates and supply constraints moderate.

December 2021

The Investment Portfolio’s Swiss Army Knife: Adding Private Credit to Portfolios for US Investors

We view private credit as an underused and effective tool that can help a broad array of investors meet their objectives.

November 2021

Overestimating Liquidity Needs Can Undercut the Return Potential of US Pension Plans

Many defined benefit plans sponsors may be denying themselves valuable opportunities to generate additional returns by overestimating their liquidity needs. Targeting a liquidity supply/demand ratio of 2x–3x can help portfolios tolerate periods of market stress.

November 2021

Is the United States Likely to Enter a Period of Stagflation?

No. While inflation could continue to run hotter than central banks expect, the US employment situation is improving, and economic growth is unlikely to stagnate.

November 2021