02/02/2023
2023 Global Strategic Insights
â—ŹWeaker growth and higher policy rates for most EM economies is beginning to be clearly seen across most EM economies.
Valuations and positioning suggesting some value for EM investors, but worsening external metrics are increasing vulnerability.
â—ŹOil and gas prices showing much uncertainty given geopolitics, supply decisions, and lack of investment.
Base metals declining on the back of demand destruction, and, gold likely to be trading lower on further real rate increases before rallying later this year (2023).
â—ŹMajor players expecting a decline in long end rates of global bond curves:
the front end should be anchored by hawkish central banks paralyzed by still too - high inflation.
â—ŹForward corporate earnings have not started correcting for the recession, wider credit spreads, steepening in HY vs IG, lower - maturity exposures, are expected.
â—ŹWhile we are seeing balancing act from central banks as they maintain restrictive policy to bring inflation down against a backdrop of recessions across most G10.
â—ŹExperts expect inflation to remain above target all year, as they anticipate a global recession
USD outlook hinges on the intersectionof:
1, Global growth
2, Terminal rate pricing, and
3, Terms of trade.
While peak USD is here, global growth isn't strong enough to warrant a reversal yet. consolidation in Q1 is being seen and a deeper correction afterwards is much expected.
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Emelbo Clements Clements Emelbo Mukelabai
