Fynsa
Common sense suggests that we should wait until the end of the rate-hiking cycle before investing again, but keep in mind that time deposits no longer pay what they did a few months ago, and inflation is also falling.
At the last FOMC (Federal Open Market Committee) meeting, they changed the forward guidance of their statement, hinting that there is a good chance that this will be the last rate hike of this cycle.
The level of uncertainty caused by the banking crisis is leading us to adopt a more defensive stance in terms of asset allocation.
The measures taken by the Fed and the FDIC (Federal Deposit Insurance Corporation) have helped contain the problems related to U.S. banks, so there should be no lasting impact on financial stability.
The divergence between equities and interest rates cannot continue much longer, and it should reverse.
Although the Fed is nearing the end of its rate-hiking cycle, the federal funds rate is still likely to rise further, given the strength of the labor market, though at a moderate pace.
Higher interest rates put pressure on valuations during 2022, but the focus will now shift from valuations to corporate earnings in an increasingly challenging macro environment.
Most baseline scenarios for 2023 assume either a soft landing or a mild recession, under the assumption that inflation will decelerate significantly and that the terminal policy rate would be in the range of 5.0% - 5.25%.
