GPR/APREA Index Report - January 2022

The region’s markets opened 2022 in negative territory due to expectations of rising inflationary pressures, a potential reversal of quantitative easing, and higher interest rates. In its first meeting of the year, the Fed indicated that a rise in its benchmark rate will soon be appropriate with inflation running well above target and the labor market approaching maximum employment. This means the initial quarter-point rate-hike of the cycle is likely to kick in at the next Fed meeting in March. Asset purchases will also be cut to US$30 billion in February and come to a halt by March. Analyst are now penciling in a more aggressive tightening cycle of at least a 25-bps hike at each of the Fed’s meetings for the rest of the year. REITs bore the brunt of the negativity to underperform both bonds and equities in January.