Global Macro Outlook Q3 2023: The long and winding road
Macroeconomic Strategy Team
6 July 2023
Key takeaways
Recession postponed, not canceled—Despite the aggressive policy tightening we’ve seen so far, economic activity in developed economies proved to be more resilient than expected amid a strong rebound in the services sector.
Inflation is still too sticky at uncomfortable levels—While headline inflation is easing, core inflation remains stubbornly high, and it isn’t just due to services inflation: Goods inflation is inflecting higher after a period of decline.
We believe central bank policy easing will be more gradual than consensus expectations—From the Bank of Canada to the Reserve Bank of Australia to Bank Negara Malaysia to the U.S. Federal Reserve, central banks around the world are proving to be more hawkish than expected.
Shifting geopolitics and the need for a new market playbook—There are signs that we’re entering a new global regime, requiring a rethink of how risk assets respond to changes in the macro backdrop. To be forewarned is to be forearmed. We continue to believe:
1. The market is premature in its pricing of dovish pivots from central banks, both in terms of timing and magnitude.
2. There’s a risk that even if the Fed pauses in the coming months, the next move could be more tightening, not easing.
3. Markets need to reassess the central bank put for asset prices.
Takeaways from China’s NPC Meeting & upcoming drivers for Greater China equity market
In addition to the recent breakthroughs in AI and humanoid robot development, we observe other positive catalysts that further support the region’s market.
Five macroeconomic themes for 2025: a global economy in transition
2025 is shaping up to be a year of transition. With that in mind, we explore five key forces that we believe will drive the global economy and markets this year. Return to this page periodically for additional timely insight and resources to help guide you through 2025.
As rate paths shift and market volatility is expected to increase across global rates, credit, and currency markets, we explain why the sub-asset classes within the Asian fixed income space (Asia high yield, Asia investment grade, and Asia local currency) could provide shelter with opportunities.
There is no free lunch. But Risk Diversification comes close in investing. A diversified portfolio was shown to optimize returns with lower volatility in the long run.
If we focus too much on chasing the highest yield and upfront yield generation, we could suffer from early capital depletion and miss the total return opportunity towards the later stages of the investment journey.
Amid volatile market conditions and higher interest rates, seeking security by burying your savings in a deposit account is tempting. As the saying goes, “cash is king”. Or is it?
