January started with optimism, with both equities and bonds rising in response to cooling inflation and an anticipation that the central banks will raise rates by less than forecast. Inflation remains elevated above the target 2% level, but is moderating. Central Banks appear closer to the end of the interest rate cycle than the start.
Market Performance (GBP)
MSCI World Index - +4.93%
S&P 500 - +3.85%
FTSE 100 - +4.35%
BMBG CREDIT- +2.17%
Jobs Numbers Surprise To The Upside
In the US, jobs report showed an increase of 517,000 in January, crushing estimates, as the unemployment rate hit a 53-year low. Some of this may be revised out and could be
labour hoarding but the US economy remains surprisingly robust.
Global Growth Numbers
The IMF said global growth would fall to 2.9% in 2023 from 3.4% in 2022, but its latest World Economic Outlook forecasts mark an improvement over an October prediction
of 2.7% growth this year with warnings that the world could easily tip into recession.
Inflation In December
Inflation watch continues in the UK, US, and EU. US inflation in December (reported in January) came in at 6.5%. The UK and the EU continue to face higher inflation of 10.5% and 10.4% respectively, though inflation is moderating in both the UK and the EU.
China Growth Recovery Expected In 2023
The IMF upgraded the growth expectations for China in 2023 from +4.4% to +5.2% Emerging markets in general are expected to do well in 2023 due to a combination of China re-opening and a weakening Dollar. India's growth prospects look stronger, with the IMF forecasting +6.2% GDP growth in 2023.
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