Capital Markets Outlook | Q2 2022
Asset Allocations: The risks of a recession rose in Q1, but it is not yet the base case of our outlook.
|
Current quarter Previous quarter Change from previous quarter |
Underweight | Neutral | Overweight |
|---|---|---|---|
| Equity | |||
| U.S. large cap | |||
| U.S. small cap | |||
| U.S. value | |||
| U.S. growth | |||
| Europe | |||
| Japan | |||
| Emerging markets | |||
| Fixed income | |||
| U.S. government | |||
| U.S. investment-grade corporates | |||
| U.S. mortgage-backed | |||
| U.S. floating-rate bank loans | |||
| U.S. high yield | |||
| Non-U.S. developed country | |||
| Emerging markets | |||
| Commodities | |||
| Cash |
Currency viewsU.S. dollar versus |
Favor other | Neutral | Favor dollar |
|---|---|---|---|
| Euro | |||
| Pound | |||
| Yen |
Neutral on equities, again
We advocate caution for the second quarter, as the S&P 500 Index might not fully reflect risks to U.S. consumer spending.
Reducing credit risk
It is likely that the pull-forward in spending from pandemic-related stimulus and higher inflation will combine to sap the spending power of U.S. households in 2022.
Commodities overweight
Energy and other commodity prices have surged as Russia's invasion of Ukraine and war-related sanctions disrupt supplies.
The end of the Great Moderation
April 13, 2022 | Capital Markets Outlook
Russia's invasion of Ukraine may stop the string of more moderate business cycles since 1982 and raise the risk of recession.
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