The world is coming to terms with the reality of inflation, the consequent rise in interest rates and tightening quantitative easing measures. Geopolitically, the Russian-Ukrainian war is still ongoing and there is no evidence of it ending soon. During all these moving parts, risk asset prices adjusted to the downside to provide for these risks. The most important questions investors are trying to answer currently is: (1) how long will it take for inflation to normalise? (2) how high should interest rates be pushed to contain inflation? (3) how much of the medicine is already included in the prices of risk assets? The way we go about answering these questions every day is to employ a quantitative process where the analysis of data is objectively steering our active allocation decisions.

The above chart illustrates higher inflation across the globe. It is noteworthy that USA inflation is the highest in 40 years. In addition to this, most countries are above their inflation targets, which further demonstrates that inflation is a global issue. China, however, seems to have its inflation under control which makes them more competitive economically in relation to the rest of the world.