2022 Global Market Outlook

Playbook for a Shifting Economic Landscape

Explore the future we see for financial markets and discover how we’re investing to prepare for it.

Four Key Investment Themes

In many cases, the pandemic postponed, but did not prevent, economic activity across the world–leaving room for additional growth in 2022. However growth brings inflation risk, and a potential catch-22 for policymakers managing recovery.

Raising Rates, Reducing Stimulus: The Fine Balance
Raising Rates, Reducing Stimulus: The Fine Balance
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The stage is set for a rotation from overpriced stocks to relatively cheaper cyclicals, and from U.S. equities to non-U.S. equities. It's a premise that investors have heard for before, but will it actually happen?

With central banks tightening monetary policy at different speeds across the world, we think fixed income investors should consider revisiting durationwithin their bond portfolio, and diversifying selectively across geography and sector.

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Major interest in sustainability might soon be followed by major public and private investment–presenting new opportunities for investors looking to increase exposure.

Tactical Allocation Views

As of November 30, 2021

The tactical allocation views are prepared by the T. Rowe Price Multi-Asset Division and informed by a subjective assessment of the relative attractiveness of asset classes and subclasses over a 6- to 18-month horizon.

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Valuations are elevated, but earnings strength buoyed equities in 2021—although it will be difficult to grow earnings at the same pace in 2022. Moderating economic growth, tightening central banks, and COVID‑19 uncertainty pose headwinds.

Lingering inflation could keep upward pressure on yields, challenging higher-quality sovereigns and longer-duration bonds. Credit fundamentals and demand for yield are supportive, although we see limited upside potential due to current valuations.

This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action. 

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Variable Annuity

Duration measures a bond’s sensitivity to changes in interest rates.

Additional Disclosures

Copyright © 2021, S&P Global Market Intelligence (and its affiliates, as applicable). Reproduction of any information, data or material, including ratings (“Content”) in any form is prohibited except with the prior written permission of the relevant party. Such party, its affiliates and suppliers (“Content Providers”) do not guarantee the accuracy, adequacy, completeness, timeliness or availability of any Content and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such Content. In no event shall Content Providers be liable for any damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with any use of the Content. A reference to a particular investment or security, a rating or any observation concerning an investment that is part of the Content is not a recommendation to buy, sell or hold such investment or security, does not address the suitability of an investment or security and should not be relied on as investment advice. Credit ratings are statements of opinions and are not statements of fact.

Information has been obtained from sources believed to be reliable but J.P. Morgan does not warrant its completeness or accuracy. The index is used with permission. The Index may not be copied, used, or distributed without J.P. Morgan’s prior written approval. Copyright © 2021, J.P. Morgan Chase & Co. All rights reserved.

Copyright © 2021, Markit Economics Limited. All rights reserved and all intellectual property rights retained by Markit Economics Limited.

Important Information

This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.

The views contained herein are those of the authors as of December 2021 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.

Risks: International investments can be riskier than U.S. investments due to the adverse effects of currency exchange rates, differences in market structure and liquidity, as well as specific country, regional, and economic developments. These risks are generally greater for investments in emerging markets.  Small-cap stocks have generally been more volatile in price than the large-cap stocks.  The value approach to investing carries the risk that the market will not recognize a security's intrinsic value for a long time or that a stock judged to be undervalued may actually be appropriately priced. Sustainable investing may not succeed in generating a positive environmental and/or social impact.

Fixed-income securities are subject to credit risk, liquidity risk, call risk, and interest-rate risk. As interest rates rise, bond prices generally fall. Investments in high-yield bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.  In periods of no or low inflation, other types of bonds, such as US Treasury Bonds, may perform better than Treasury Inflation Protected Securities.  Investments in bank loans may at times become difficult to value and highly illiquid; they are subject to credit risk such as nonpayment of principal or interest, and risks of bankruptcy and insolvency.  Diversification cannot assure a profit or protect against loss in a declining market.  

This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types, advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.

Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy.

Past performance is not a reliable indicator of future performance. All investments are subject to market risk, including the possible loss of principal. All charts and tables are shown for illustrative purposes only.

T. Rowe Price Investment Services, Inc. 

© 2021 T. Rowe Price. All rights reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc.

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