Midyear 2023 Global Market Outlook
In our Midyear 2023 Global Market Outlook, we expand on the factors shaping our economic and asset class views, anchoring our themes on key topics for investors.
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December 7, 2022
Navigating a Bumpy Landing
Across the world, 2022 has been an incredibly challenging year. Global economies are grappling with inflation, central bank tightening, and expectations of lower economic growth — each of which signals caution for investors. Looking to 2023, we expect market uncertainty and volatility to persist for some time, leading to a bumpy journey ahead with a wide range of possible outcomes.
Outlooks
On the Brink of Overtightening
With peak inflation behind us, peak policy rates should follow. The focus shifts back to growth concerns.
Bonds Are Poised for a Turn
The Fed’s hawkish rhetoric will likely shift over the next year, opening a window for increased opportunities in fixed income.
Rate Peak Likely to Signal Equities Recovery
Our base case timing for a pivot to a sustained upside move in equities is in the second half of 2023, but it all is dependent on the timing of the US rate-hike cycle reaching its peak.
Investment Themes
Downside Protection: Why It Matters for All Markets
In an environment of heightened market uncertainty and volatility, investors need to consider the portfolio guardrails they have in place to help withstand market disruptions.
Patience Is a Virtue: Finding Opportunities in Fixed Income
Investors should prepare to make shifts in their portfolios as peak policy tightness draws closer — preserving liquidity and exercising patience in identifying entry points.
Keeping a Close Eye on the Dollar
Rising yields and recession risk are likely to abate in 2023, sending the US dollar lower and opening the door for a broad rally in risk assets, particularly non-US equities.
Quick Take
Global Chief Investment Officer, Lori Heinel, CFA discusses our market outlook and what investors should be prepared for in 2023.
Video 02 : 13
About the Outlook
As investment challenges grow more complex, State Street’s Global Market Outlook was created to alert investors to portfolio risks and opportunities in the coming year, based on the research of our investment teams. Research on near-term and longer-term market issues is at the heart of who we are as investors. It drives the kinds of outcome oriented portfolios we create for clients, drawing on the full range of our indexed and active solutions, as well as our asset allocation expertise.
View previous editions of the Global Market Outlook