Our multi-asset investment views - November 2022





We have tactically upgraded to neutral as we see a window where greater interest rate stability takes the pressure off equity valuations. However, we are cautious heading into 2023 given recessionary risks and over-optimistic corporate earnings expectations.


Government bonds

We retain our neutral score as although we have seen tentative signs of the labour market softening, we prefer to wait for this trend to be more pronounced.



No change to our overall positive score. Although demand is slowing down, supply side factors are supportive for commodities, particularly in the energy and agricultural sectors.



We have upgraded credit to positive as valuations are very compelling and we believe there is a strong carry opportunity that will drive returns.




Valuations in the US market continue to be a challenge, but in the short term we believe the market will view interest rate stability and the recent dip in inflation as reasons to be less negative. We therefore tactically upgrade to neutral.



A new prime minister and chancellor have effectively removed the political tail risk in the country for the time being, leaving us with a neutral view of the UK.



We have tempered our view as price levels suggest plenty of bad news has been priced in, while the weakness of the euro has been a tailwind for exporters.



We upgrade to neutral as we recognise that a cheap yen and attractive valuations could provide medium-term support for the market, particularly relative to others in the region.


Global Emerging Markets1

Emerging market (EM) equities tend to struggle when the US dollar is strong. Given we now have a neutral view on the dollar as we believe it is close to peaking, we upgrade our EM equity view to neutral.

Asia ex-Japan



The 20th National Congress of the Chinese Communist Party saw President Xi cement his reign. As valuations appear attractive and the first tentative signs of an easing in Covid restrictions emerge, we upgrade our view to neutral.



EM Asia ex China

Although South Korean exports have seen sharp falls, with demand for semiconductors declining, better valuations justify an upgrade to neutral.

Government bonds



Based on our valuation models, valuations for US 10-year bonds are fair. History suggests that core inflation will not come down fast and therefore a “higher for longer” approach will be needed for most of 2023.



We believe the Bank of England needs to be more aggressive with rate hikes. We remain negative while we wait to see how the bank responds to the high level of inflation.



We remain negative. The European Central Bank remains dovish which could lead to a steepening yield curve given inflationary pressures. The yield curve is the difference between the interest rate on a longer-dated bond and a shorter-dated bond.



Yields remain unattractive compared to other markets and slowing global growth is still a risk. 


US inflation linked bonds

Break-evens, or inflation linked bonds,  have risen due to rising commodity prices. Our view that break-evens will stay elevated leads us to believe that valuations are fair, leaving us neutral.


Emerging markets local currency bonds

We remain neutral with a preference for Latin America which is showing signs of peaking inflation. We particularly like the front end of the yield curve in Brazil where inflation expectations are coming down and there is room for yields to continue to fall.


Investment grade credit



Valuations remain attractive and companies are cutting back on capital expenditure and share buy-backs. This, alongside lower earnings, indicates cautious behaviour that is supportive for US investment grade (IG) credit.



We maintain our positive score, with credit spreads looking particularly compelling at current levels and moderating gas prices are also supportive. The credit spread is the margin that a company issuing a bond has to pay an investor in excess of yields on government bonds and is a measure of how risky the market perceives the borrower.


Emerging markets USD

We retain a positive score. Although tighter global liquidity presents a near-term risk for emerging markets, current valuations and yield levels are attractive.


High yield bonds (non-investment grade)



We have downgraded US high yield as aggressive credit spread contraction, driven by large inflows combined with tight supply, have resulted in valuations becoming less cheap.



We have upgraded as refinancing risks are low in Europe and we have seen a reduction in tail risks associated with European gas storage, which is above historical levels due to warmer weather.





We retain our positive score. Demand remains robust and the supply picture looks increasingly stretched as OPEC+ has curbed supply in an already tight market.



We remain neutral as a strong dollar is not supportive for gold. While gold has been resilient despite the current headwinds, a lack of carry makes it less attractive in an environment of high real rates.


Industrial metals

This is the most cyclical commodity sector where supply-side factors have less influence on prices. Instead, levels of demand are more important and we remain neutral given the risks to economic growth.



Very tight supplies and low inventory keep us positive, but we acknowledge a strong US dollar can be a headwind. The sector can be a less volatile hedge against geopolitical risk.




US $

We remain neutral, noting that the dollar can be an effective hedge when sentiment is negative, but the October US consumer prices index (CPI) print suggests inflation could be peaking.


UK £

We struggle to see a positive story for sterling. The short-term relief rally we have seen is likely to be curtailed by a deteriorating growth outlook.


EU €

As concerns over energy supplies in Europe abate, we expect volatility in the euro to subside and for fundamentals and rate differentials to drive the exchange rate. For this reason, we remain neutral.



We remain neutral as the authorities have shown more intent to lean against depreciation.



We remain negative. While billions are being spent in Japan to defend the currency, the fall in yen is unlikely to stop if other central banks continue to raise rates.


Swiss franc ₣

The inflation differential versus Europe supports a weaker Swiss Franc. The need for a safe haven also looks to be diminishing given high European gas storage levels, milder weather so far and a stabilisation in geopolitical risks.


Global Emerging Markets includes Central and Eastern Europe, Latin America and Asia.