Jupiter Asset Management is concerned markets could see further volatility in the latter part of 2018, while the strength of the dollar could also threaten global growth.
Speaking at Jupiter Asset Management’s annual investment dinner last night, fund manager Ariel Bezalal said: “Our concern is that what we had in February with the shocking rise in volatility was a rehearsal for what we will in the second half of this year as that is when pace of quantity tightening by the Federal Reserve really goes into overdrive.
“In conjunction with that they will still want to raise rates three times.
“My personal view is that it will be very difficult for them to raise rates another two to three times this year and another three times next year and top of that shrink the balance sheet by another $600bn.
“With that in mind our view is that the Fed will raise rates another two to three times and that will be it.”
Bezalal said the common-held view that global growth tended to be strong when the dollar was weak and soft when the dollar flags was a simplistic one.
He said: “My concern right now, and this is one of the reasons we are cautious, is because the dollar is getting fired up and that has enormous ramifications for global growth.
“We are beginning to see in the last week or so cracks beginning to appear in certain emerging markets.
“I fear Turkey could be one of the places where there could be a bit of volatility.
“Crucially it has a dollar/euro funding liability. The weakness of the Turkish lira is beginning to filter through to other emerging markets such as Mexico and Brazil, so we are seeing subtle contagion going on as well.”