In financial markets, the trend of 2021 is undoubtedly good for investors. Vaccination means the economy is likely to shake off the blockade caused by the epidemic, while fiscal stimulus has led to a rapid rebound in employment and pushed the stock market to record highs. In terms of fixed income, the central bank maintained its quantitative easing programme to keep bond yields stable. Next year looks a lot trickier.

Inflation is accelerating in all countries, and the problem of supply chain disruption, which has led to rising consumer prices, has not been resolved. The chaos in the labour market has given employees bargaining power for the first time in years. If central banks have to tighten monetary policy in the coming months to deal with price pressures, the stock market will start to overheat. The omicron variant shows that novel coronavirus is still a clear and real danger. In 2022, fear may replace greed as the driving force that dominates the market.

Reason for caution: $119,717,895,834140

This is the total value of the global stock market, which reached a record $120 trillion, double the low when the epidemic began in March 2019. This growth is ruthless.

Us technology companies have played an important role in expanding the market capitalization of global stock markets, with Apple Inc alone contributing nearly $3,000bn and Microsoft Corp and Amazon.Com Inc together contributing another $4.1 trillion. But analysts are divided over whether it is possible for the Fed to turn off the "water" faucet:They expect the S & P; to fluctuate between 4400 and 5300 by the end of next year, up or down 20 per cent, the second largest in a decade; reaching the highest forecast would mean a 14 per cent rise from the current level, while the lowest forecast would mean a decline of 6 per cent.

The national debt market began to compete with the stock market.

In the past, government bonds could hardly compete with the stock market, but that is changing. Although Treasuries have held steady during the Fed's shift to hawkish policy, yields have risen steadily from low yields in the early stages of the epidemic.

In the new normal of massive monetary stimulus, it is rare for bond yields to exceed equity returns. As fixed-income returns begin to show, stocks are no longer a particularly popular investment option.

Inflation is worrying

Rising consumer prices have unnerved policy makers, and the seemingly brief rebound in supply shocks has turned into a more worrying trend against a backdrop of the unsealed spending rebound and the energy crisis.

Inflation expectations are as important as the actual rate of change in consumer prices. If these expectations start to deviate from the 2 per cent target generally set by the central bank, policymakers could raise interest rates before the economy is strong enough to withstand higher borrowing costs, jeopardizing the nascent growth recovery.

Keywords of the year

Federal Reserve Chairman Powell and central bank governors agreed that the rise in consumer prices was "temporary". News keyword statistics show that he has sparked at least one debate about whether price increases are sticky.

Earlier this month, Powell said it was time to scale back bond purchases at a faster pace. A key question for next year is whether the theory that has been mistakenly predicted for the past decade that monetary stimulus will drive up prices is correct.

Credit spreads tend to stabilize

Credit spreads, the premium offered by corporate issuers over benchmark government yields, have returned to a state of steady tightening before the outbreak, but the post-summer inflation panic caused a major shock. Nevertheless, the economic background has improved significantly, so credit spreads will be stable in 2022. Spreads on US Treasuries generally outperformed those in Europe, which were higher than at the start of the year.

In December, the company's IPO market ground to a halt earlier than usual due to the advent of omicron. In all currencies, European mergers and acquisitions this year are 20 per cent lower than last year. Us corporate bond issuance is also down 1/5 from $1.75 trillion in 2020. Still, pent-up demand should mean extra momentum at the start of 2022.

Unconventional event

The biggest victim of emerging markets this year is Turkey, which is very different from Argentina. Turkish President Recep Tayyip Erdogan shows little sign of giving up the fight against economic orthodoxy. He declared himself an "enemy of interest rates" and held an unconventional belief that keeping official borrowing costs too high was responsible for accelerating inflation.

Although Turkey's inflation rate has soared to more than 21 per cent, the country's central bank has cut its benchmark interest rate to 14 per cent four times in recent months, making the country one of the countries with the largest negative real interest rate spreads in the world. The lira is going to have another bad year.

Encrypted currency roller coaster

Sometimes the process is as important as the destination. The current price of Bitcoin is in line with its average in 2020, at about $47000. But it was as high as $68000 and as low as $29000 at one point. The value of cryptocurrencies is unstable.

Regulation may determine the success or failure of cryptocurrencies. Is it a liar's paradise or digital gold? A Ponzi scheme or the future of money? The answer will be revealed next year.