Mar 01, 2023

Individual investors are often bombarded with specific stock calls and targets.

However, we believe you can get a better medium to long term perspective by considering asset class, sector, thematic and macro economic views.

To help you, every week, we pour through the research produced by some of the larger institutions, and summarize their market thoughts.

Below are this week’s 3 updates:

US data confirmed early signs of strong January rebound activity and firmer inflation, Fed to raise 2023 median dot (5.4%). Despite elevated inflation and resilient activity in Euro area, wage growth in H2 22 was subdued. UK February soft data was strong, pointing to further near-term monetary policy tightening. Expect the BoJ to launch yield curve control phase-out from April given recent CPI data and initial confirmation hearings. Volatile political situation in Latin America adds uncertainty to region.

China 23 GDP growth above 6%. Mild (-1%) Q2/Q3 US recession, with 0.3% 23 growth. Underweight DM equities, markets yet to price in recession. However, structurally higher inflation, higher-for-longer interest rates (no 23 rate cuts) and steeper yield curve, all favour value strategies in sectors (EM& Europe) and regions (Energy and Healthcare). Inflation to persist. Inflation-linked bonds and income from ST government debt is attractive. LT government bonds do not appeal as negative stock-bond correlation has inversed.

Raised 2023 China growth forecast. Strong Asia region H2reflecting improved tech demand and China reopening spill over effects. Japan on recovery path with China reopening and resilient overseas economies. US rates to terminate in March after 0.25% Fed hike. 0.25% cuts likely to start in March 2024, to 3.125% year-end 2024. Euro (-0.7%) and UK (-0.9%) recessions unavoidable. ECB to rate hike by 0.5% in March and 0.25% hikes in May and June. BoE to 0.25% hike in March.

* Please note these are not the thoughts or analysis of illio but the respective institutions. We have summarized what we believe are key points. We assumes no responsibility or liability for any errors or omissions in the content of this site. The information contained herein is not intended to be a source of advice and the information contained in this website does not constitute investment advice.

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