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:
Persistent structural, and not cyclical, inflation unlikely to land on target this year or next with loose fiscal discipline. If Fed rates have peaked, soft landing (small recession w/ unemployment <5%), hard landing (bigger recession w/ unemployment >5%) and no landing all have 33.3% probability likelihood. AT1 bonds currently pricing in too much risk and therefore appeal. Dividend stocks will help weather economic storms.
Fed to deliver two hikes before Q4 but brief June pause. The Market currently prices a limited chance of a 25bp June hike, but market price for year-end Fed funds rate has increased from 4.42% to 4.72%. ECB to pause hikes in July following Euro area inflation and growth downward trends. UK credit growth slowed in April, but at least one more hike is priced in from the BOE. BOJ to revise/scrap YCC in July as underlying inflation strengthens and the JPY weakens. Return of former Turkish Minfin Simsek strengthens our non-consensus forecast of major rates and FX adjustments in H2 23.
Fed funds futures imply 20% chance of June hike, down from 70%. Markets price in strong chance of one further hike. Labour market strength and stubborn inflation imply hiking has not terminated. Recent US equity rally is unsustainable given stretched valuations, broad S&P500 index and MSCI All Country World tech index trade at 15% and 25% premium respectively to 10-year average. Recent AI rally is sustainable. USDJPY movement to reverse and reach 122 by year-end. Commodity asset class have anticipated 20% total return forecast by Jun-24. Expect Brent crude USD95/barrel by end-23 and is most preferred commodity, supported by Saudi Arabia surprise production cut. Solid central bank demand, renewed USD weakness, and rising US recession risks equate to gold forecast at USD2,250/oz by Jun-24. Yield strategies in copper appeal.
* 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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