Investor Account Access
Investor access to Shareowner accounts and Closed End Funds accounts.
Monday 05 December 2022
Investment Talks, Fixed income, Equity, Perspectives
December 2022 | We predict that 2023 will be a two-speed year, with plenty of risks to watch out for. Bonds are back, market valuations are getting more attractive, and a Fed pivot in the first part of the year could trigger interesting entry points. We expect global growth to slow significantly, with several countries across both developed markets and EM suffering stagnation, while others may face a slowdown at best.
01 | Developed market central banks have hiked rates aggressively in 2022 to tame inflation pressures, but they are unlikely to keep this pace going in 2023.
02 | The energy crisis will be the main economic driver in Europe, which we believe will fall into recession.
03 | The level of the Federal Reserve’s terminal interest rate will be critical; if close to 6%, a US recession will be in the cards and could be more severe than what is expected today.
Unless otherwise stated, all information contained in this document is from Amundi Asset Management US (Amundi US) and is as of November 17, 2022. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi US and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. Amundi Asset Management US is the US business of the Amundi Asset Management group of companies.
For markets, this economic backdrop calls for a confirmation of a correction regime at the end of 2022 and in H1 2023, with inflation slowing, but still above normal levels. The correction phase will likely be driven by the profit recession, which we expect to materialize in H1. We believe a more cautious stance in equities would be prudent. For government bonds, slowing economic growth and hints about the change in the size of rate hikes may call for an active duration stance.
In every calendar year following a year of negative US high yield returns, high yield bonds posted positive returns. In this paper, we analyze the seven negative years of high yield bond returns to determine the reason for this positive performance – and consider what this could mean for investor portfolios in 2023.
The most striking takeaway from the Federal Open Market Committee is the near uniformity among FOMC members that the terminal level for rates will exceed 5%. It appears the lower-than-expected October and November Consumer Price Inflation data was not enough to change members' views. Debt ceiling considerations are likely to make the cash balance that the US Treasury holds at the Fed very volatile, leading to reserve volatility. If it leads to money market disruptions, it would be a sign that the supply of reserves in the system is approaching scarcity and could halt the balance sheet run-off.
Before investing, consider the product's investment objectives, risks, charges and expenses. Contact your financial professional or Amundi US for a prospectus or summary prospectus containing this information. Read it carefully. To obtain a free prospectus or summary prospectus and for information on any Pioneer fund, please download it from our literature section.
Securities offered through Amundi Distributor US, Inc.
60 State Street, Boston, MA 02109
Underwriter of Pioneer mutual funds, Member SIPC.