Each year the Anfield investment team undertakes a comprehensive economic forecast for the following calendar year. The process begins with a 2-day gathering of Anfield staff and select expert colleagues from other firms. The results of that 2-day gathering were previously circulated in the form of 2023 global themes and wild cards. The second part of this annual process is the derivation of specific macro-economic forecasts outlined below. From here, Anfield will develop capital market expectations and then reformulate investment strategies designed to capture the opportunities we see, and importantly to try and avoid or limit areas of risk going forward. We expect the entire process to be completed by mid-end of January and will circulate and implement our findings as soon as possible.
To summarize our 2023 macro-economic forecast, the team evaluated factors such as Fed Policy, # of Rate Hikes, US GDP, US Unemployment, and ECB Policy, amongst others. Broadly speaking, we see a world where major central banks look to continue their efforts to bring down inflation, which predominantly entails a continued increase in interest rates. The level at which the Central Banks decide to cease hiking will be just as instrumental as how long they decide to remain at these elevated levels. Developed and non-developed nations alike are dealing with the fallout of global inflation; we see this trickling down to economic growth slowing as we see many nations falling into recession during ’23. In our view, 2023 looks to have some differentiation to 2022 when looking at risk assets. Debt markets look to be a potential source of relative opportunity (or at least better than 2022) as we see improvement in high-quality yield opportunities. Equity markets are all watching for when the Central Banks “pivot” and start to begin cutting rates again. Those markets may continue to face headwinds as rates continue to go up and inflation remains elevated.
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