Crystal Ball: What global institutions are forecasting for 2023
Blackrock Investment Key message The Great Moderation, the four-decade period of largely stable activity and inflation, is behind us. The new regime of greater macro and market volatility is playing out. A recession is foretold; central banks are on course to overtighten policy as they seek to tame inflation. This keeps us tactically underweight developed market (DM) equities. We expect to turn more positive on risk assets at some point in 2023 – but we are not there yet. And when we get there, we don’t see the sustained bull markets of the past. That’s why a new investment playbook is needed. Themes 1. Pricing how much of the economic damage is already reflected in market pricing. Equity valuations don’t yet reflect the damage ahead. We will turn positive on equities when we think the damage is priced or our view of market risk sentiment changes. 2. Rethinking bonds. We like short term government bonds and mortgage securities. Long-term government bo...