Abbey Road Investment Views, Nov. 2022
Rate hikes to slow soon
• Following big rises, central banks will ease off soon
• But rates will go higher and stay high for a while
• The focus may switch to recession risks and profits
• Rising rates are increasing fiscal risks (Focus p2)
• Regional Roundup – China/Japan stocks, C-S (p3)
Policy rates have risen sharply this year with both the ECB and Fed hiking 75 bps in their recent meetings. However, Australia has been moving in smaller increments and the Bank of Canada increased ‘only’ 50bp in October, both hinting that it is time to slow down. Chairman Powell maintained a hawkish line at his press conference but the case for smaller hikes starting in December, or at the latest January is strong. That said, rates have further to go and will likely stay up for a prolonged period.
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