Look for:

Our offer for

Research Detail

2023/04/12 / Erste Group Research

Global Strategy 2Q 2023


The recent turbulence in the financial system has made an end to the cycle of interest rate hikes more likely in the near future. In addition to the economic slowdown, the key factor here will be the momentum of core inflation. We expect a sideways trend in government bond yields. On the equity market, we recommend growth stocks from the technology and healthcare sectors. In corporate bonds, we continue to favor the BB segment.

Economy: After a good performance in the 1st quarter, the US economy could weaken from the 2nd quarter. Private consumption in particular has recently been an important pillar of the economy. Falling inflation rates will reduce real income losses, but savings accumulated during the pandemic will be increasingly depleted. Thus, spending patterns should be more closely aligned with current income. Inflation should fall steadily over the year, although the momentum of core inflation is still too high, mainly due to rents. In the euro zone, domestic demand has been suffering from high inflation and higher interest rates since the 4th quarter. However, declining inflation rates combined with wage increases should support consumption in the future. However, we believe that the sharp rise in uncertainty in the global financial system has dampened the outlook for business investment. In view of the downward trend in global raw material prices, we expect inflation to fall this year.

Bonds: Due to the turmoil in the banking sector, the US Fed is signaling less monetary tightening than in February. We expect only a 25 basis point rate hike. Recent events could weaken the economy and inflation, so the yield curve across all maturities has fallen significantly recently. Yields at the short end are now too low in our view, as the Fed will not cut rates as quickly as currently expected. The ECB is also more cautious now after raising rates in March. However, if what is happening in the banking sector does not affect the expected economic data, further rate hikes can be expected. We expect two more rate hikes at 25 bp each. German yields have also fallen and returned to January levels, making them consistent with a weak economy and approaching interest rate peak.

Currencies: The global weakening environment and the turbulence in the banking system would argue in favor of safe-haven currencies. However, the Swiss franc and the US dollar are directly affected, so we expect a sideways movement in both currencies for the time being. The gold price should also benefit from negative real yields in 2Q.

Shares: We expect a moderate increase in the global stock market in a range of 0 to +5% in the 2nd quarter. The important segment of growth stocks benefits from high profitability, good growth prospects and a foreseeable end of the interest rate hike cycle. The technology, healthcare and consumer cyclical sectors should be favored.

PDF Download Download PDF (1,013kB)

General information

AuthorErste Group Research
Date2023/04/12
Languageen
Product nameGlobal Strategy
Topic in focusCredits/ Corporate bonds, Equities, FX, Macro/ Fixed income
Economy in focusAustria, Croatia, Czech Republic, Eurozone, Germany, Hungary, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Switzerland, Turkey, United States
Currency in focusCroatian Kuna, Czech Koruna, Euro, Hungarian Forint, Polish Zloty, Romanian Leu, Serbian dinar, Swiss Franc, Turkish Lira, US Dollar
Sector in focus-
Download





Decline
Accept

We use cookies and web analysis software to give you the best possible experience on our website. If you consent, these tools will be used. For more details please read our Data protection policy.

INFORMATION FOR PRIVATE CLIENTS / CONSUMERS

Any information, material and services regarding financial instruments and securities provided by Erste Group Bank AG or any of its affiliates (collectively “Erste Group“) on this and any linked website hereafter (jointly the “Websites”) shall be exclusively to investors who are not subject to any legal sale or purchase restrictions (the “Interested Party“).

The publication and distribution of information as well as offering and selling of products and services described on the Websites is prohibited by law in some jurisdictions. For this reason, persons in countries in which the publication as well as the offering and selling of products and services described on the Websites are not permitted by law, must not enter the Websites and/or acquire the products displayed on the Websites.

Neither Erste Group nor any third party shall offer access to the Websites or offer the products to especially, but not limited to citizen/residents of the United States and “U.S. person” (as defined in Regulation S under the US Securities Act 1933 as amended). For this reason, the distribution or redistribution of the information, materials and products into United States or into any other jurisdiction where it is not permitted under the applicable law, as well as to the citizens/residents of these countries shall be prohibited. The securities displayed on the Websites have not been and will not be registered under the US Securities Act of 1933 and trading in the securities has not been approved for purposes of the US Commodities Exchange Act of 1936. For this reason the securities may, inter alia, not be offered, sold or delivered within the United States or, for the account and benefit of U.S. persons.

The Interested Party is solely responsible to examine, whether he may enter the Websites under the law applicable to it. Erste Group shall not be responsible for the distribution of content of any of the Websites to individuals or entities which provide false information about their right to enter the Websites. For this reason Erste Group shall not be liable for any legal claims or damages which may result from the unauthorized entering or reading of the Websites.

By agreeing to this hereto, the Interested Party confirms that
(i) It has read, understood and accepted this Information and the Disclaimer;
(ii) It informed itself about any possible legal restriction and warrants that it is not restricted or prohibited to enter the Websites according to any law applicable; and
(iii) It does not make available the contents of the Websites to any person who is not qualified by law to enter the Websites.