26 JAN, 2023
By RankiaPro Europe
By Simon Thorp, CIO Credit at Aperture Investors
The key market narrative will now begin to change from inflation to growth. Inflation will decline but disappointingly slowly, leading to interest rates being kept higher for longer. The key is the 2-year/10-year US Treasury curve inversion – which at the time of writing on November 20, is down -70bps. In our assessment, this indicates that a deep recession is on its way.
The world has never experienced such a backdrop when it has been:
1) Awash with debt.
2) In a post-Covid recovery state.
3) Emerging out of ten years of zero interest rate policy and QE.
4) Struggling with the geopolitical fallout from Russia and China.
Looking ahead to 2023, therefore, we have the following views:
By Alexis Bienvenu
By Duncan Lamont