What does this mean for the markets

Frankfurt Seems agreed: 2022 will be the year of central banks. The US Federal Reserve is signaling several interest rate increases for 2022, and the European Central Bank will end the PEPP bond program at the end of March next year. But how much did markets anticipate the dramatic shift in monetary policy by the US Federal Reserve and the European Central Bank?

Prices and revenues will not develop according to a predictable plan. But above all react to surprises and deviations from expectations. But one thing is already clear: Markets will have to adjust to waning support from monetary policy, and that has only partially happened so far.

The broad consensus of economists and investment strategists is roughly summed up: Inflation will last longer than initially expected, and then decline. Central banks will tighten the reins as planned, resulting in poor performance of bonds and modest overall returns on stocks only.