Market insights from our partners at BlackRock.
Surging stocks show markets believe hopes of a soft landing by the Fed to be true. We disagree and stay underweight developed market (DM) stocks.
Yields surged after more rate hikes and the UK’s fiscal splurge news. We cut UK gilts to underweight as we see higher rates and fiscal credibility questions.
U.S. and euro area inflation are likely to show persistence in data this week. We think central banks underestimate the cost of bringing it down to target quickly.
One economic release overshadowed the U.S. midterms for markets. Stocks surged last week after the October core CPI rose less than expected, stoking market hopes a Federal Reserve pause on rate hikes is nearer. That’s optimistic, we think. Goods inflation is easing as it needed to, but the labor constraints driving wage growth and core inflation persist. So the Fed is still on a path to create a recession via policy overtightening. Stocks aren’t pricing that in, so we stay underweight.
This material is intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. This material may contain estimates and forward-looking statements, which may include forecasts and do not represent a guarantee of future performance. Th is information is not intended to be complete or exhaustive and no representations or warranties, either express or implied, are made regarding the accuracy or completeness of the information contained herein. The opinions expressed are as of Nov. 14, 2022 and are subject to change without notice. Reliance upon information in this material is at the sole discretion of the reader. Investing involves risks.