Will the next market crisis turn into a contagion?

IN today’s scenario, one of our key focuses is the US Fed and European Central Bank (ECB) – both fiddling with their monetary policy. It represents a wind of change in global markets. From a tailwind due to the massive bond-buying programme that effectively supported risky assets, the tide has changed to become a headwind.

Easy money is disappearing from markets as global central banks turn the spigot on accommodative monetary policy. We now expect the Fed to embark on a total of four rate hikes in 2018, with the third hike in September and the fourth in December, each by 25 basis points (bps) to settle at 2.25%–2.50%. We believe the Fed will continue with another two rate hikes in 2019 to stabilise at 2.75%–3%.