February 28th, 2023

Unfinished jobs

In Short

As Ukraine mourns the numerous victims and damages suffered one year into Russia’s invasion, global equities have recovered from their initial sell-off, even if still down 4.3% since Feb 24, 2022. Bond markets, by contrast, have taken a more persistent hit.

Highlights:

Central banks’ uphill battle against inflation overshoots is getting even harder.
February has poured cold water on hopes that policy makers may quickly tame inflation towards target. We now have even higher peak rates in our books.
The recent rebound in long-term real rates makes Equity valuations look even more stretched. Bottoming growth in European and China’s reopening bounce are only a partial relief.
We continue to favour a (trimmed) underweight in Equities and HY, while seeing value (mostly in the carry) in IG Credit.

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Market Perspectives: Unfinished jobs

February 28th, 2023

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