Bonds are Back on the Radar Screen

Saturday 27 May 2023

Global Investment Views, Equity, Fixed income

   

Bonds are Back on the Radar Screen

June 2023 | Markets are pricing in a rosy scenario in which economic deceleration will force the Fed to cut rates in 2023. However, we believe the Fed will stay on hold for 2023 and cut rates only in 2024. Inflation is cooling slowly, and the US economy is cooling down as well. From an equity perspective, we remain concerned about future profits, which leads us to stay defensive on equities and credit. On the fixed income side, we stay constructive on US duration and expect the US yield curve to steepen.

01 |  Given uncertainty regarding inflation expectations, the likelihood that Fed will cut rates any time soon is low

02 | The US economy is cooling down GDP is expected to start slowing substantially in Q2 with a contraction seen in the second half of the year. The resilience of the US consumer is the key variable to watch.

03 | We believe markets are too complacent and are ignoring the wall of risks. There are signs of a gaps between fundamentals and excessive valuations in many areas.

Bonds Definitely Back on the Radar Screen

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