OCBC Wealth Insights: Peering into the 4Q21 crystal ball

2021 started on a positive note with optimism over Covid vaccines and global growth recovery hopes. 1Q21 growth momentum mostly surprised on the upside, but the green shoots recovery story hit a speedbump in 2Q21 with the resurgence of Covid cases, particularly the more virulent Delta strains. Financial markets have stayed buoyant so far in 3Q21 despite some major central banks signaling that it is appropriate to withdraw some of their current policy accommodation. The US Federal Reserve is already signaling that a taper of bond purchases is imminent.

Peering into the crystal ball, what should we expect for financial markets and Asia ahead? Will there be a repeat of a taper tantrum? Will inflation be transitory or persistent? Will geopolitical uncertainties or US-China tensions continue to weigh on prospects in 2022?