FXStreet reports that economists at UBS do not forecast a sharp slowdown, and they expect the equity rally to continue.

“The Fed remains eager to avoid alarming markets, and inflation looks unlikely to compel them to tighten prematurely. The seven-day moving average of new cases in the US has more than doubled since the meeting, and Fed Chair Jerome Powell has said that the pandemic is ‘still very much with us’ and continues to cast a shadow over economic activity. On the price side, the latest data indicates that key drivers of inflation started to normalize in July.”

“The delta variant of COVID-19 could delay the recovery, but not derail it. Economic and earnings fundamentals look set to remain robust, even though growth momentum may be slowing. While the second quarter may mark a peak in momentum, fundamentals remain robust.”

“Instead of a hard landing, we expect inflation to recede gradually in 2022 and growth to remain strong. Against this backdrop, we now expect 45% growth in S&P 500 earnings in 2021 and think consensus forecasts for 2022 are likely to be revised upward by nearly 10%. We expect the S&P 500 to reach 5,000 by the end of 2022”