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:
Weak China growth and inflation will result in PBoC cutting benchmark lending rates in June. BOJ will tweak YCC in June/July 2023. US recession to begin Q3 2023 due to monetary policy tightening and credit winds. Fed’s hawkish pause emphasised optionality, but expect peak rate reached. New debt ceiling will result in financial disruptions from larger than usual upcoming treasury issuance. Euro area entered technical recession, but worst behind us; expect peak rates at 3.75 after two 25bp hikes (June & July). UK recession call removed because of resilient activity. 25bp BoE June hike, but now expect two further 25bp hikes (August & September) with a terminal rate of 5.25%.
US recession expected, but timing pushed back. Fed to skip June rate raise, but expect July hike. Risk appetite is improving as debt ceiling and banking concerns subside. BoC and RBA go against consensus with June rate hikes and look set to move again in July. UK upside inflation surprise reinforces call for June hike, but market pricing for several more hikes looks excessive. USD/CNY: Profile revised higher. End-2023 now 7.15 (prior 6.60). USD/JPY: Profile revised higher. End-2023 now 145 (prior 140).
US rate hiking cycle not over. Anticipate US recession towards the end of the year, but economic slowdown less severe than previously feared. Less defensive in US equity sector selections with earnings forecasted to rise 1.0% and 8.4% in Q3 and Q4 respectively. Prefer short-duration fixed income, especially US Treasuries, which can outperform as recession bites. High-quality credits offer attractive carry and solid balance sheets with default protection. EM asset classes appeal given, lower valuations, better macro-outlooks, and Fed cut prospect and USD weakness later in the year. UK H1 growth to reach 0.2%. June hike before pause at 4.75%. GBP strength continuing towards USD1.30 year-end forecast. India, High-tech exports and dynamic start-up ecosystem could see India’s potential growth rate could rise to 7.5%/year over the next decade.
* 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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