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:
More banking stress to follow recent FRB turmoil. Mild US recession forecast (below consensus). Expect slow exit from recession. Fed to hike by 25bps in May & June, peaking at 5.25%-5.50% (above both market & FOMC forecasts). Markets currently pricing in 2023 rate cuts. This scenario unlikely unless bond credit crisis materialises. UK recession no longer forecast following sharp decline in energy prices and increased fiscal support. Euro area 2023 GDP revised down to 0.7%. Small underweight to equities and credit. However, Europe appeals given current trading discount to US of c.20% on same sector basis (traditionally only 10%). More US-China decoupling ahead.
US rates peaked; futures markets point to a 4.4% Fed funds rate by the end of the year with cuts starting in September. However, expect 2024 rate cuts, steeper and later than market consensus. ECB to raise rates by 25bps and peak in June. Real estate investments offer inflation protection if inflation persistence above policy targets continue.
Fed hiked 25bp and signalled expected hawkish pause. ECB stepped down to expected 25bp pace communication supports base case for 25bp hikes in June and July. BOE to hike by 25bp in May with little change to forward guidance. Stagflation likely as central banks signal hiking cycle end and growth data likely falling more than inflation. China PMIs and high-frequency activity data suggest growth momentum has softened entering Q2; Covid-sensitive services continue to recover, but real estate drag forecast. Historical data implies Industrial metals are best performing commodity in periods of inflation between 3% and 5%.
* 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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