With news of another Covid-19 vaccine on its way and optimism rising ahead of the end-year holidays, it looks like 2021 will shape up to be much better than 2020.
But one forgotten danger could spoil the party: inflation. Price rises are far from investors’ minds, but an ‘inflation tantrum’ could have devastating effects on various countries’ economies if they are not kept in check.
Some commentators have warned that a bear market in stocks could be near, citing things like the fall in US long-term interest rates or the decline of volatility as a sign of investor complacency.
But Garry Evans, global head of equity strategy at HSBC, argues that actually, a bear market usually starts when long-term interest rates and volatility are rising – although they are not necessarily reliable indicators.