How our worldview is changing
With inflation declining and central bank interest rates reaching their peak part way through 2023, high quality fixed income becomes attractive. Emerging market equities, helped by a relaxation on Covid restrictions by China, are also strong portfolio diversifiers alongside high-dividend, low volatility US equities.
The global economy: peaks, pivots, and pickups
We expect the current cycle of weak growth and rate hikes to continue through the first three months of 2023 and into the second quarter. A new cycle should then start, which we believe will be characterised by three major shifts:
The pace of global economic growth is likely to decelerate further in early 2023, but then begin to recover later in the year.
We expect euro area and UK economic activity to be under more pressure than in the US and China.