Russell Investments' 2023 Global Market Outlook: Strategists Expect a Shift From Darkness to Dawn in 2023 Outlook
Russell Investments' strategists believe a recession seems likely in 2023 and equity markets may struggle, but a global economic recovery should be on the horizon by year-end.
"The main issue for 2023 is whether inflation pressures ease sufficiently to allow central banks to step away from rate hikes and potentially begin easing," said Andrew Pease, global head of investment strategy at Russell Investments. "We expect inflation will be on a downward trend as global demand slows. This should allow central banks to eventually change direction and may set the scene for the next economic upswing."
Pease added that he expects the next U.S. recession will be relatively mild, particularly because household and corporate balance sheets are in good shape. Aside from inflation, he doesn't see any significant obvious economic imbalances.
"It's reasonable to expect that a recession in 2023 will see GDP decline less and unemployment rise by less than the average for modern recessions," Pease said.
Russell Investments' key asset-class views for 2023 include:
"Overall, 2023 is likely to be the year of the diversified portfolio, where a traditional balanced portfolio of 60% equities and 40% fixed income does well," Pease said.
At year-end 2022, Russell Investments' cycle, value, and sentiment investment decision-making process points to an uncertain global equity market outlook. The team's conclusion for equities is that the cycle is poor but may improve, value is epensive to at best fair value, and sentiment is still supportive.
Meanwhile, the team's process concludes that government bonds are attractive, as the cycle turns supportive with inflation set to decline and central banks slowing the pace of tightening and potentially going on pause in early 2023. In addition, value has turned positive after rises in yields this year and sentiment is also supportive.
The firm's strategists summarize their current asset-class preferences as follows:
For more information, please see the 2023 Global Market Outlook
About Russell Investments
Russell Investments is a leading global investment solutions firm providing a wide range of investment capabilities to institutional investors, financial intermediaries, and individual investors around the world. Building on an 86-year legacy of continuous innovation to deliver exceptional value to clients, Russell Investments works every day to improve the financial security of its clients. The firm has $274.3 billion in assets under management (as of 9/30/2022) for clients in 32 countries. Headquartered in Seattle, Washington, Russell Investments has offices in 19 cities around the world, including in New York, London, Toronto, Tokyo, and Shanghai.
Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of the stock market, or of any specific investment.
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