First quarter 2023.

Whilst 2022 was a challenging year, 2023 has been witness to a number of welcome developments, leading to positives for both global equities and bonds over the first quarter, despite the backdrop of stubbornly high inflation and the collapse of the Silicon Valley Bank (SVB) and Credit Suisse, which caused concern about another potential credit crunch and hit values of bank shares across the globe.

The head of the IMF, Kristalina Georgieva compared the ongoing headwinds that the global economy is facing as the challenge of “climbing one ‘great hill’ after another. First was Covid, then Russia’s invasion of Ukraine, inflation and a cost-of-living crisis that hit everyone,” adding, “So far, we have proven to be resilient climbers.”

It is not yet over, and our outlook here at RJ Hitchin is that macroeconomics will continue to dominate headlines throughout 2023 – and possibly beyond. We will see global growth though, albeit slow growth. Additionally, equity and fixed income markets will continue to display heightened volatility whilst inflation remains high and Central Banks continue to hike interest rates.

What is the 2023 outlook for investors?

Once the concerns over rising interest rates and high inflation start to abate, recession fears will reduce and we could start to see positive surprises from both corporate earnings, and from government and corporate bonds which are now offering enticing yields for the first time since the financial crisis almost 15 years ago.

Expectations for inflation are more positive in 2023:

*Sourced from JPM Guide to Markets

We acknowledge that it feels difficult to remain calm during volatile periods, and we have had a fair share of economic volatility! Importantly too, we remain invested and with a long-term approach in the knowledge that markets have recovered from situations like this before.