Capital Markets Outlook  |  Q4 2022

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

Equities to remain under pressure

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


Highly selective in fixed income

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


Commodities could benefit from energy rally

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


Price stability and credibility

October 13, 2022  |  Capital Markets Outlook

As the Fed's interest-rate hikes make a recession more likely, 2023 earnings estimates for stocks need to come down.

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