Market Compass September 2022
- Hawkish speeches at Jackson Hole have poured cold water on nascent hopes that policy setters may blink soon and slow or stop rate rises amid rising recession risks.
- Equity valuations and (thus far resilient) earnings will face stiffer headwinds into winter, with a recession in Europe looming amid an energy crunch and higher rates.
- Investor positioning remains very bearish, leaving scope for selective bounces. Yet we still favour an underweight in riskier assets. The strong demand for the stretched USD is unlikely to reverse soon.
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