Global Markets Overview: October 2022

In this report, we highlight how markets remain focused on a “Goldilocks” outcome rather than the bear(s):

• Markets are pricing-in that a number of major central banks will continue to raise their policy rates over the next 6-months, and will then stop hiking or turn to cutting policy rates.
• Bond investors are expecting these tighter monetary conditions to bring down inflation quickly in most advanced economies in 2023, especially the US. There is a good chance that inflation could be more “sticky” than markets are pricing-in.
• Equity markets and lower-grade credit markets are also pricing-in that these tighter financial conditions, to bring inflation under control, will only lead to a small slowdown in GDP and earnings growth, again in the US especially. Over the next 12 months, we think the risks are more tilted to the downside.

Contact

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David Hoile

Global Head of Asset Research at WTW

David is the Global Head of Asset Research at WTW, responsible for economic and capital market research. He also is a member of the Investment Assumptions Committee, who help guide investment policy globally.

email Email phone +44 20 7170 2144

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