Wall Street Predictions for 2023 Global Recession Bonds Rise Dollar

Wall Street Predictions for 2023: Global Recession, Bonds Rise, Dollar Loss – Bloomberg

It may be one of the most anticipated recessions of all time, but that doesn’t mean it won’t hurt.

Barclays Capital Inc. says 2023 will go down in history as one of the worst for the global economy in four decades. Ned Davis Research Inc. puts the probability of a severe global downturn at 65%. Fidelity International believes a hard landing is inevitable.

To kick-start the new year, Bloomberg News has collected more than 500 calls from Wall Street strategists to outline the investment landscape of the future. And bullish forecasts are hard to find, threatening fresh pain for investors who have just weathered the great crash of 2022.

As the Federal Reserve ramps up its most aggressive tightening campaign in decades, the consensus is that a recession, albeit mild, will hit both sides of the Atlantic, with a high bar for any moderate change of course, even as inflation peaks.

Still, humility is the need of the hour for forecasters who have largely failed to forecast the 2022 cost-of-living crisis and double-digit market losses. This time around, the consensus could turn out to be dead wrong again, delivering a slew of positive surprises. For their part, Goldman Sachs Group Inc., JPMorgan Chase & Co. and UBS Asset Management expect the economy to defy the bearish consensus as price growth slows – signaling big gains for investors if they assess the market correctly.

Expect an odd year in trading. Deutsche Bank AG expects the S&P 500 index to rise to 4,500 in the first half of the year before falling 25% in the third quarter as a downturn hits – only to climb back up to 4,500 by the end of 2023 as investors drive a recovery.

Perhaps the easy money will finally be made with bonds. After the asset class posted its biggest loss in modern times last year, UBS Group AG expects US 10-year bond yields to fall to as much as 2.65% by the end of the year, indicating juicy coupons and renewed demand attributed to places of refuge.

The crypto bubble has now burst. Investment houses are in no mood to persuade the industry, having spent the boom years hailing the speculation craze as the same kind of digital gold for tomorrow while peddling virtual currency products to clients in traditional finance. Now, crypto references in forecasts for 2023 are all but wiped out.

And do you remember Covid? For global macro strategists at least, that is a distant memory. The pandemic is just one key consideration in China’s risky effort to quickly reopen its economy – the outcome of which could have profound implications for the global investment and consumption cycle.