Global Recession, Bond Surge, Dollar Drop

This may be one of the most anticipated recessions of all time, but that doesn’t mean it’s not without harm.

Barclays Capital says 2023 will be the worst year for the global economy in 40 years. Ned Davis Research Inc. puts his odds of a severe global recession at 65%. Fidelity International believes a hard landing seems inevitable.

To kick off the new year, Bloomberg News collected more than 500 calls from Wall Street strategists to paint a picture of the investment landscape ahead. And bright forecasts are hard to come by, threatening to bring new pain to investors who have just endured the big crash of 2022.

A mild but dovish policy recession, even as inflation peaks, as the US Federal Reserve ramps up its most aggressive tightening campaign in decades The consensus view is that the hurdles to transformation are high and will hit both sides of the Atlantic.

Still, humility is the routine of prophets who have largely failed to predict a cost-of-living crisis and double-digit market losses in 2022. Goldman Sachs Group, JPMorgan Chase and UBS Asset Management see price growth slowing as the economy defies the bearish consensus.

Expect an uneven year of trading. Deutsche Bank AG expects the S&P 500 index to drop 25% in the third quarter on the back of the recession after rising to 4,500 in the first half.

Perhaps easy money will eventually be made in bonds. After the asset class posted its biggest loss in modern times last year, UBS Group AG said juicy coupons and new haven demand could push his 10-year yield in the U.S. to his 2.65% by the end of the year. expected to decline.

Meanwhile, the crypto bubble has burst. Investment firms are unwilling to talk about the industry after a boom year pitching cryptocurrency products to traditional financial clients while hyping speculators as tomorrow’s same kind of digital gold. In the outlook for the year, references to cryptocurrencies are almost gone.

Remember Covid? It’s a distant memory, at least for the world’s macro strategists. The pandemic is just an important consideration in China’s risky efforts to quickly reopen its economy. The consequences could have serious implications for the global investment and consumption cycle.

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