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:
DM central banks to crank policy rates higher and keep tight for longer as a result of sticky inflation. Expect further Fed hikes despite pause, as well as more ECB hikes. Recession remains foretold as signs indicate mild recession has unfolded in the U.S. and euro area. Overweight inflation linked bonds as market pricing underestimating the risk of persistently higher inflation. Short-dated bonds for income and EM debt as policy loosens appeal as DM interest rates stay higher for longer.
Macro markets reflect US soft landing and gradual adjustments in monetary policy align with our consensus base case. Continued U.S. dollar strength into year-end expected as tepid growth and asymmetric downside economic risk amplify investor demand for carry and defensive assets. Sovereign bond yields will end the year lower than H1. Project government bonds rally before year end. Expect Asia growth accelerating to 5.1% by Q4. China policy easing imminent to prevent minimizing social instability, whilst India and Indonesia appeal. European equities to fall up to 10% in ST, thus upgraded defensive (e.g. pharmaceuticals) over cyclical preference. Yet resilient earnings and low valuations suggest 8-12% LT price upside. High ST US interest rates make holding commodities expensive and thus offer lower risk-reward than interest paying T-bills. Mid 2024 Brent forecast at 78.
Above consensus view, 25% probability of US recession in next year (down from 35%), compared to the median consensus forecast of 65%. Forecast core PCE inflation to fall to 3.7% by Dec 2023. Expect 25bp July Fed hike after June skip, terminating at 5.25%-5.5%. Except ECB September hike bringing terminal 4.00 rate 25 bps higher than originally forecast. S&P500 end of year projection lifted 12.5% to 4500. However, European stocks are favourable due to undeserved discount; STOXX Europe 600 will outperform the S&P 500 in 2023.
* 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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