“The second half of 2013 could have global investors discussing impending inflationary pressures. With over 325 fiscal and monetary measures of the last 15 months, and surely more to come, inflation will begin to assert itself, most likely in the emerging markets,” Krosby said. “If the U.S. can find the right balance between austerity and growth, job creation should pick up markedly in the second half, bringing with it higher wages, credit demand and inflation, albeit a modest uptick. Fingers crossed that we reach the point where we are concerned with inflation, as long as it’s associated with growth. But that’s a story for the latter part of 2013. Now we just have to get through the first two quarters.”John Praveen, chief investment strategist for Prudential International Investments Advisers, also expects continued growth in 2013, noting that central bank liquidity and improving risk appetite should enable global stock markets to post 10-15 percent gains with several global stock markets, including the U.S., likely to reach new all-time highs. “Global equity markets are likely to post further gains in 2013 driven by abundant central bank liquidity and low interest rates, further rate cuts and expansion of quantitative easing and central bank asset purchases, continued stabilization in the Eurozone and easing risk aversion and modest GDP rebound in emerging economies and in the U.S.,” Praveen said. “Reasonable valuations and an expected earnings rebound after weakness and disappointment in 2012 should also contribute to global equity market gains in 2013.” In the fixed income markets, Michael Lillard, chief investment officer of Prudential Fixed Income, agrees investors will continue the search for yield and said although 2012 appeared bland on paper; it actually proved to be a bright year for the spread sectors. He believes the demand for bonds will continue in 2013. “The combination of low growth and inflation, combined with high demand from pension funds, retail investors and of course, the Fed, was a formula for low Treasury rates, and declining spreads across fixed income sectors in 2012,” Lillard said. “In a world where demand for bonds remains strong, but developed country de-leveraging both constrains growth and reduces supply, I believe the overarching theme in fixed income will continue to be the search for yield.”
George Castineiras, senior vice president of Total Retirement Solutions at Prudential Retirement, agrees with the optimistic assessments of Prudential’s market experts. “I am upbeat about the growth opportunities for the retirement industry in 2013 and beyond mainly due to favorable long-term demographics and the more than $18 trillion in retirement assets that will be put into play over the next two decades,” Castineiras said.Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $1.005 trillion of assets under management as of September 30, 2012, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit http://www.news.prudential.com/.