Key Insights

A synchronized global economic downturn is underway.
The global economy has been hit by several headwinds, almost all of them leading back to higher inflation. Europe is likely already in recession, the U.S. will enter recession in Q2 2023, while China struggles to make recovery headway.
Global inflation will only decline at a painfully slow pace.
Global inflation has peaked, but price pressures are proving very broad-based and sticky, particularly in the United States. Deliberate central bank action to create labor market slack and weaken demand is needed to lower inflation.
Global central bank tightening has further to go.
Federal Reserve (Fed) policy rates are set to hit 4.75%–5% in 2023 and stay at that level for most of the year. Other central banks are also tightening but the Fed is relatively more hawkish, putting upward pressure on the U.S. dollar.
Equity markets have further to slide.
Markets have faced up to the reality of central bank tightening, but now need to adjust to a slowing earnings profile. Investors should focus on segments of the market which benefit from low growth and the strong U.S. dollar.
Fixed income investors should seek safety and high quality.
Rising recession risk will put downward pressure on U.S. Treasury yields and spur further spread widening, thereby taking the shine off short duration, low quality assets.
Challenged equity and fixed income markets create a positive backdrop for real assets.
The diversification benefits of real assets in this macro environment are particularly valuable, as are their fundamental strengths and defensive characteristics.

Webcast replay

Recorded October 12, 2022

What should investors expect from markets and the economy in the fourth quarter and beyond? Listen as Seema Shah, Chief Global Strategist and Todd Jablonski, Chief Investment Officer & Head of Asset Allocation share their perspectives including key investment themes and asset allocation preferences.