Higher bond yields more headwind than hurricane

Although we expect a further rise in government bond yields to undermine the returns from most “safe” assets, we don’t expect it to be big enough to bring the prices of most “risky” financial assets crashing down. Nonetheless, we think that the returns from the latter will generally be far smaller over the course of 2022 and 2023 than in recent years. Meanwhile, we continue to expect a poor performance from most commodities.