The Cambridge Weekly – 19 April 2022

Easter review and outlook

The annual rate of inflation, as measured by the consumer price index (CPI) was reported at 7% in the UK, 8.5% in the US and even Germany recorded 7.3%. These are heights not seen for 40 years and were unsurprisingly front and centre of last week’s news flow. While equity market investments have historically demonstrated their inflation-hedging characteristics, the fact that investors appeared to shrug off these new peaks may well point to the belief that this is about as high as inflation is likely to get.

March 2022: Monthly and quarterly capital market returns review

At the beginning of December last year, we wrote in our 2022 outlook, that “barring any further catastrophes, improvements should continue next year” and “in broad terms, we expect normalisation to be the key theme of 2022”. With the end of the first quarter behind us, it is obvious things have not gone as hoped. The man-made, senseless humanitarian catastrophe that is Russia’s war on Ukraine, is scuppering any hope of Europe normalising any time soon, and the ensuing length of the energy and commodity price shock has deteriorated the economic outlook. At the same time though, pandemic pressures have receded as hoped, and a form of normalisation has indeed set in across the Western, vaccinated world, except sadly we are not (yet) reaping meaningful post-pandemic reopening dividends.

Has US inflation peaked?

Good news or bad news? US inflation readings brought both last week, as two key indicators were released, and showed mixed signals. First up was the release of last month’s consumer price inflation (CPI) figures, which revealed an 8.5% year-on-year rise – the biggest annual cost jump in more than 40 years. Even so, this figure was lower than economist estimates. More tellingly though, the monthly jump in so-called ‘core’ CPI (which excludes the volatile components of food and energy) was below expectations. This suggests inflation might have stopped running away, and may even be slowing down, a sign that capital markets took well.

Has US inflation peaked?

Good news or bad news? US inflation readings brought both last week, as two key indicators were released, and showed mixed signals. First up was the release of last month’s consumer price inflation (CPI) figures, which revealed an 8.5% year-on-year rise – the biggest annual cost jump in more than 40 years. Even so, this figure was lower than economist estimates. More tellingly though, the monthly jump in so-called ‘core’ CPI (which excludes the volatile components of food and energy) was below expectations. This suggests inflation might have stopped running away, and may even be slowing down, a sign that capital markets took well.

This material has been written on behalf of Cambridge Investments Ltd and is for information purposes only and must not be considered as financial advice. We always recommend you seek financial advice before making any financial decision.


Past performance is not a guide to future performance.


The value of your investments can go down as well as up and you may get back less than you originally invested.


Source of financial market data: MorningstarDirect.