Market Commentary: New regime fuels narrative flip flops

Thoughtful commentary from our partners at BlackRock:

Flip flops

Market narratives have flip-flopped through the year as the new macro regime plays out. We stay selective amid stagnating activity and volatile inflation.

Market backdrop

U.S. stocks dipped and bond yields climbed after solid U.S. services data. Markets are coming around to our view of key central banks holding policy tight.

Week ahead

U.S. CPI data this week should show more post-pandemic normalization. We see inflation on a rollercoaster ride ahead as an aging population starts to bite. 

We‘re in an unprecedented macro environment that is driving constant shifts in the market narrative: from hopes of avoiding recession to fears good macro news could be bad for markets in just a few months. We see the market moving with data as if we’re in a normal business cycle. But we’re in a new regime, with pandemic disruptions giving way to structural shifts that are playing out now, like an aging workforce. We see opportunities from timing market swings and staying selective.

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