DFAC - 2021 Global Market Outlook - Q3 Update: The Song Remains The Same

• The reopening should continue across the major developed economies through the second half of 2021.
• The focus for markets has shifted to the strength of the growth rebound, the implications for inflation and the timing of central bank moves to taper asset purchases and eventually raise interest rates.
• Our view is that the inflation spike is mostly transitory, a combination of base effects - from when the CPI fell during the initial lockdown last year - and temporary supply bottlenecks.
• Market expectations for Fed lift-off in 2022 are premature. We expect the Fed to commence tapering in 2022, with the second half of 2023 the likely timing for the first interest rate hike.
• Global equities remain expensive, with the very expensive U.S. market offsetting better value elsewhere. Sentiment is close to overbought, but not near dangerous levels of euphoria.

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