![]() ![]() ![]() If the Fed continues to raise rates, an even stronger dollar could accelerate the onset of recession elsewhere. In 2022, the strong dollar has proved to be a wrecking ball for other economies, both in the developed world and for emerging countries that rely on hard currency debt. Rates should eventually plateau, but if inflation remains sticky above 2 per cent, they are unlikely to reduce quickly even if banks take other measures to maintain liquidity and manage increasingly challenging debt piles.Ī key factor to watch is where the dollar goes from here. Until markets absorb this fully, we could see sharp rallies on the back of expected action by the Fed, only for them to reverse when it doesn’t materialise in the way they expect. But in our view, a hard landing remains the most likely outcome in 2023. The previous norm of central bank “whatever it takes” intervention during the financial crisis and the pandemic is going or has gone. Markets want to believe that central banks will blink and change direction, negotiating the economy towards a soft landing. Richard Edgar talks to Chief Executive Officer, Anne Richards, and Chief Investment Officer, Andrew McCaffery, about the year facing investors View the investment implications of the 2023 Outlook across different asset classes in this one-page matrix.Download the PDF of the 2023 Outlook to understand the latest thoughts of our investment teams as they position themselves for the polycrisis ( and download the Asia Outlook here). ![]() Inflation has dogged markets this year and is likely to remain high, bringing an end to the era of easy money and increasing the risk that overtightening by central banks will trigger a sharp recession, an “inflation bust”. ![]()
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