Recent bank failures in the US and Europe are only the latest piece of bad news that market actors have absorbed over the last year. A war in Europe, persistent high inflation, commodity market upheavals and an increasingly acrimonious US–China relationship are all weighing on investor sentiment.
Most crucially, the steady ratcheting of interest rates initiated by the US Federal Reserve is forcing a rethink for allocators of capital. The short-term pain is most visible in bank balance sheets and publicly traded asset prices, but the long-term effect could be most profound for private equity, venture capital (VC), infrastructure, real estate and other segments of private markets.
