Asset allocations: Be cautious with risk assets as rate increases continue.

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
Interest-rate sensitive
U.S. government
Non-U.S. developed country
Emerging markets
Corporate credit
Investment grade / High yield / Floating rate
Securitized
Residential mortgage credit
Commercial mortgage credit
Prepayment risk
Commodities
Cash

Currency views U.S. dollar versus	Favor other	Neutral	Favor dollar
Euro
Pound
Yen

Investors should exercise caution with equities, but also be aware of the potential for a bear market rally as in early Q3.

Caution is warranted for high-yield bonds and other areas of corporate credit, while securitized sectors offer more attractive opportunities.

In energy markets, inventory levels of distillates remain tight and production may be constrained in the near term.

January 12, 2023 | Capital Markets Outlook

We believe markets expect inflation to decline sooner than it will, and that there is limited upside for stocks.

Currency views