Global Markets Overview: September 2022

In this report, we highlight how currency volatility will likely stay high given economic divergences:

• Cyclically, currencies will likely continue to have an important impact on portfolios – in our view forward-looking asset returns face downside risks, currency volatility will remain high given monetary policy, fiscal policy, and economic divergences, and stock/bond correlations will be less stable.
• We are slightly negative on the US dollar over the medium-term after recent strong appreciation against all major currencies. However, in the shorter term, the dollar may continue to strengthen further given the relatively faster pace of Fed hikes and global recession risks, which both support capital flows into the US.