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  • Writer's pictureArjun Mittal

Abbey Road Investment Views, Feb. 2023

Updated: Apr 4, 2023

Markets discount central bank hawkishness


• Investors expect a cut in US rates by end-year

• But a return to 2% inflation will take time

• The rally in the NASDAQ is vulnerable

• US corporate earnings are sagging (page 2)

• US dollar down, Adani under pressure (page 3)


Overview


Last week’s rate hikes in the US, eurozone and UK prompted stock market rallies, despite continued hawkish talk by central bankers. Markets now price in one or maybe two

more US rate hikes, and then expect a rate cut before endyear (see the implied rate curve, right). Central bankers emphasise that they are data-dependent, but don’t

underestimate their determination to bring inflation back to the 2% target. Fed Chairman Powell was emphatic on this point in his press conference: Over-tightening is a less serious mistake than under-tightening in his view, because the former can be corrected easily with rate cuts whereas the latter could unleash higher inflation expectations.


Download the full Investment Views of the month below.


Abbey Road Investment Views February 2023
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