Global Macro Outlook Q2 2023: Navigating turbulence

Macroeconomic Strategy Team

4 April 2023

Events of the past quarter have strengthened our conviction on several of the team’s core economic views.

• To be cautious about the risk-on price action in January given we had expected the first half to be bumpy
• The full impact of prior policy tightening has yet to filter through to the real economy
• A global recession is likely within the next 12 months
• Investors may need to reassess its belief that the U.S. Federal Reserve (Fed) will always come to the market’s rescue

In our view, the macro backdrop will get worse before it gets better in the current global economic cycle, and investors should expect to experience higher and longer bouts of volatility through the first half of 2023.

At this point, we believe it’s crucial to reassess how we should be thinking about the Fed’s approach to policy making, especially in the context of the second biggest bank failure in U.S. history which has raised doubts about the health of the U.S. banking system.

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