• Our view of the equity market remains unchanged. We see the likelihood equities will head lower over a 6-12 months’ time frame. We see equities potentially rebounding in the second half of 2023 after undergoing an adjustment for lower earnings and valuations.
• A pivot on interest rates is unlikely to happen any time soon as we believe the Fed is adamant in keeping interest rates “higher for longer” to avoid the mistakes of the 1970s. In fact, should they be forced to reduce interest rates, it would likely be a result of either a financial or economic crisis, both of which are not positive for the equity market.
• Bonds look to represent a better risk-reward opportunity as interest rate approach their terminal rate and the economic slowdown bites. A major bullish signal for bonds is the actual peak in the current tightening cycle – which will likely be represented by an unchanged Fed Fund rates at two consecutive FOMC meetings.
• We don’t think China’s reopening trade is straightforward. While we have seen strong tactical gains over the past few weeks, further upside maybe limited by a surge in Covid cases on the mainland and an inherently weak domestic economy (due to the prolonged Zero Covid policy).
• We are neutral on Gold short-term as the tug-of-war between higher real interest rates versus safe haven buying continues with no clear winner. Longer-term we are bullish on gold as the current de-dollarization movement is something which is unlikely to be reversed.
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Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
Zephanie has more than 10 years of experience (since 2010) in the financial industry, spanning Compliance, Product Management, Investment, Risk Management, Mortgage loan, Estate planning, Financial planning and Cyber-risk.
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