Developed Countries

Labor market strength and consumers’ evident willingness to dip into their pandemic savings keep our optimistic consumer thesis intact. We remain tactically overweight equities.

European inflation will decline through 2023, which will greatly help households and consumption. But can European inflation remain low after that?

MacroQuant is overweight bonds, underweight equities, and neutral on cash. Within the equity universe, the model is underweight the US and overweight Japan, the UK, and Australia.

Commodity currencies have been rather resilient, despite the broad rise in the dollar this year. In our view, we are about to experience a big rotation in commodity currency market performance at the crosses, from NZD, to CAD and finally to AUD.

Recession is not yet fully priced in, so markets have further to fall next year. But watch for a buying opportunity in the second half.