Investment bank Morgan Stanley says investors should avoid stocks and bonds in 2022 and look towards alternatives due to higher interest rates and stricter monetary policy. The bank’s strategists expect next year to be a challenging one for investors exposed to stocks and bonds, with difficulties coming from multiple directions.
Writing in the 2022 outlook report, strategists say, “We think that 2022 is really about ‘mid to late-cycle’ challenges: better growth squaring off against high valuations, tightening policy, rambunctious investor activity and inflation being higher than most investors are used to. We see plenty of challenges, including downside to the S&P 500 and U.S. 10-year yields being well above forwards… we think there are a number of reasons to suggest that global equities’ serene progress over the last 18 months will become somewhat more volatile going forward as earnings growth slows, bond yields rise, and corporates continue to juggle the challenges of disrupted supply chains and elevated input costs.”
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