2023 Macro2Markets Outlook Review: The MUFG Global Markets Podcast

George Goncalves, MUFG Head of U.S. Macro Strategy still thinks it’s a macro-driven year ahead. The economic backdrop continues to worsen in the first half, and it’s possible that the recession hits sooner. The good news – U.S. inflation should continue to decline. By mid-year, the shift from inflation to growth concerns should result in a short-lived Federal Reserve (Fed) pause, and then easing by year-end. However, markets are already pricing to such an outcome on day one! The risk is that instead we get one last major sell-off at the start of 2023 as global rates rise (driven by other central banks – notably the BoJ and ECB along with supply concession). And we also think that risk markets (i.e. stocks) have yet to make their final low, too. While we wait to get clarity on the outlook for the economy, earnings, and risk assets, we make the case to dollar-cost average into bonds. We like L/T USTs/MBS on dips more so than credit, for now. For further information please also see the executive summary of our 2023 Macro2Markets Outlook titled Passing the Baton: A shift from inflation to growth concerns.  

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