1H Strategy – Q1 2023

September 28, 2023 by yvonne

In 2022, the market focus was on inflation. In 2023, focus is switching to the growth outlook now that interest rates are much higher than one year ago. Thus, the outlook for fixed income securities in 2023 is now far improved as the global rate hike cycle eases. Developed market equities will remain challenged in the first half of 2023 by the slowdown in economic growth caused by tighter monetary policy.

After approximately 300 interest rate hikes by central banks in 2022, the monetary policy cycle is nearly over in many countries, most importantly in the US. Major exceptions include Europe and potentially Japan. Government bonds in countries nearing the end of their cycles such as Canada, Australia and the US are now more attractive. Furthermore, the hedging properties of government bonds against weakness in equities should once again return in 2023.

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