Central banks and “revenge spending” will drive markets in 2022

Confidence is high among institutional investors that they are well prepared for all that 2022 has to throw at them, including rising inflation, interest rate hikes and higher stock, bond and currency volatility.

Research published by Natixis Investment Managers shows that 62% of institutional investors expect that demand for big ticket items – dubbed “revenge spending” – will be a significant driver of growth in 2022.

However, most believe that policymakers hold the economic recovery in their hands and that those policies are behind the current imbalance in supply and demand, inflation, and distorted stock valuations.

Nearly seven out of 10 (68%) believe that once central banks stop printing money, the long bull market will come to an end. But that won’t be during 2022, says the survey.

Natixis IM surveyed 500 institutional investors who collectively manage more than $13.2 trillion in assets for pensions, insurers, sovereign wealth funds, foundations, and endowments around the world.

The survey found that few broad changes will be made to overall allocation to stocks (39%), bonds (37%), cash (5%) and alternatives or other (19%) in the year ahead, with respondents preparing to make tactical moves instead.