Summary
- Equity markets delivered positive returns in the final quarter while fixed income returns were flat.
- Due to an improving labor market and stubbornly high inflation levels, policymakers are set to reduce the unprecedented fiscal stimulus and unsustainable levels of monetary policy accommodation.
- Inflation became officially politicized when Democratic Senator Joe Manchin of West Virginia cited it as the main reason for not supporting the Build Back Better fiscal bill.
- The tightening of monetary policy and reduced fiscal stimulus in 2022 will create more volatility across markets and the economy.
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