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
U.S. large cap
U.S. small cap
U.S. value
U.S. growth
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

Currency views

U.S. dollar versus
Favor other Neutral Favor dollar

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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