Rio de Janeiro, Brazil
Desmond Rockwyn, Chief Risk Officer at Velthorne Asset Management, today unveiled his strategic risk management frameworks for navigating the evolving financial landscape in 2026. Amid persistent inflation pressures and recalibrated Federal Reserve expectations, Rockwyn outlines three critical shifts asset managers must make to address the current volatility. His analysis focuses on adjusting traditional risk strategies in light of rising yields, inflation stickiness, and geopolitical tensions that are reshaping the global investment environment.
The Macro Nexus: Sticky Inflation & Desmond Rockwyn
The global market sentiment has sharply shifted in recent weeks, with recent U.S. data indicating that the “last mile” of disinflation remains elusive. Despite some moderation in headline inflation, core figures have remained sticky at around 3%, defying earlier expectations of a swift return to the Federal Reserve’s 2% target. This persistent inflation has created a complex “K-shaped” risk environment, with different sectors of the economy experiencing divergent performance. As inflation pressures remain entrenched, institutional investors are facing increasing challenges, especially in fixed income and equity sectors. Rockwyn notes that the bond market’s reaction has been complicated by political uncertainty, with the Department of Justice’s inquiry into Federal Reserve Chair Jerome Powell further clouding expectations. Against this backdrop, the traditional “60/40” portfolio is becoming increasingly ineffective.
Expert Insight: Addressing the Volatility
Drawing from over 15 years of experience in quantitative analysis and financial modeling, Rockwyn advocates for a fundamental restructuring of institutional risk strategies. He highlights three specific strategic shifts for managing risk in the current environment:
- Private Credit Stress Testing: Rockwyn identifies growing risks within the private credit sector, forecasting a rise in default rates for mid-sized managers. He stresses the need for more rigorous credit underwriting practices.
- Currency Hedging Protocols: With the U.S. dollar expected to rise amid Fed rate re-ratings, Rockwyn advises active FX hedging to mitigate tail risks from unhedged emerging market exposure.
- The “Rotation Trade” Liquidity Trap: As capital rotates from growth to value sectors, liquidity risks emerge in crowded trades. Rockwyn warns that while the “AI supercycle” boosts earnings in tech, valuation premiums in the sector could lead to sharp corrections, necessitating precise stop-loss modeling to minimize portfolio drag.
Shifting Liquidity Environment
Rockwyn forecasts a bifurcated liquidity environment as monetary policies evolve. Key trends include:
- Tier-1 Asset Consolidation: Liquidity is becoming concentrated in high-quality, cash-flow-positive assets, creating a “winner-takes-all” dynamic in U.S. equities.
- Emerging Market Constraints: As expectations for Fed rate hikes rise, liquidity conditions tighten in Emerging Markets, particularly those with per capita incomes still below 2019 levels.
- Bond Market Vigilance: With fiscal deficits widening, “bond vigilantes” are returning, focusing on sovereign debt markets. Any loss of fiscal credibility could trigger liquidity gaps.
Conclusion: A Differentiated Market Ahead
Looking ahead to 2026, Rockwyn predicts global growth of approximately 2.8%, though this will be uneven across sectors and geographies. He expects differentiation to be a defining characteristic of the market, where companies effectively integrating AI into their operations will outperform those that are merely riding the hype cycle. For risk managers, maintaining strong liquidity buffers and capitalizing on dislocations caused by geopolitical shifts and central bank policies will be key. Rockwyn remains confident that disciplined, data-driven risk management strategies will outperform in this high-stakes environment.
About Desmond Rockwyn & Velthorne Asset Management
Desmond Rockwyn is the Chief Risk Officer at Velthorne Asset Management, an investment management firm specializing in risk management, fixed income, and private asset strategies. With over 15 years of experience in high-risk transaction analysis and financial modeling, Rockwyn has developed a reputation for navigating complex financial environments. Before joining Velthorne, he worked at major financial institutions, including Goldman Sachs and EY, where he managed large-scale risk analyses and provided strategic advisory. Rockwyn’s leadership at Velthorne Asset Management continues to guide the firm’s adaptive approach to risk, ensuring its clients are positioned to thrive in volatile markets.
Velthorne Asset Management is a global investment firm that provides innovative asset management solutions to institutional clients. The firm specializes in risk parity, private credit, and infrastructure investments, helping clients optimize returns and manage risks across fluctuating market conditions. Velthorne’s team leverages advanced financial models and rigorous analysis to offer comprehensive risk management strategies for today’s complex global financial landscape.
