November 2022| Central banks are working out how far they should go in terms of their aggressive tightening talk. The strong job market does not support a shift in stance from the Fed; while signs of moderation are emerging in wage growth, it remains above pre-crisis trends, and inflation is persistent and challenging. While the peak in US inflation is likely behind us, recent data confirm that core inflation remains sticky. Financial conditions are tight, but could become even tighter as the Fed’s risk of overshooting remains high. Globally, questions over long-term debt sustainability come at a time when markets are clearly addicted to central bank liquidity. As we saw in the UK, the miscalibration of fiscal and monetary policies can force a central bank to step in.
01 | Amundi Institute Insights: Central banks are trying to work out how far they should go in terms of their aggressive tightening talk.
02 | Fixed Income: Investors should be watchful of the liquidity on balance sheets as companies spend their cash, and take note of whether policy tightening will lead to a financial instability.
03 | Equity: From a style perspective, we prefer quality value stocks. At sector level, we like energy, materials and banks.
Unless otherwise stated, all information contained in this document is from Amundi Asset Management US (Amundi US) and is as of October 27, 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.
