Our multi-asset investment views - October 2022





We remain negative on equities as while prices have fallen, we expect a further deterioration in corporate earnings given the risks of a recession.


Government bonds

We have yet to see evidence of a softening in the jobs market, which would allow the US Federal Reserve (Fed) to soften its stance on interest rates, and so we retain our neutral score.



Although demand is slowing, supply side factors are supportive for commodities, particularly in the energy and agricultural sectors.



Although the outlook for credit is looking brighter, we need to see more stability in spreads and yields before we upgrade to positive.




The region faces higher rates and overly optimistic earnings expectations, so we have downgraded our view.



Following the government’s mini-budget, the subsequent U-turn, and the volatility in the pound, we maintain our negative position.



Although valuations now appear attractive, we believe the challenges posed by the energy crisis, rising inflation and the war in Ukraine justify a downgrade.



Although we retain a negative view, we recognise that a cheap yen and attractive valuations could provide medium-term support for the market, particularly compared to others in the region.


Global Emerging Markets1

Although valuations have become increasingly attractive, EM outperformance tends to coincide with a bright global macroeconomic picture. Therefore, given the risks of a global recession, we prefer to stay on the side-lines for now.

Asia ex-Japan



We remain negative while the focus is on the five yearly Chinese Communist Party Congress assembly and await any updates on zero-Covid and other policies.



EM Asia ex China

Semiconductor prices have fallen as supply chain disruptions have eased. However, with continued destocking of excess inventory, this trend may weigh on performance.

Government bonds



Based on our fair value models, valuations for US 10-year bonds now look attractive. However, we remain neutral while monetary policy is focused on fighting inflation.



There have been significant moves in the gilt market due to the conflicts between government and central bank policy. This will likely pressure the BoE’s Monetary Policy Committee (MPC) to hike interest rates even higher.



We believe that the market is still underestimating the desire by the European Central Bank (ECB) to raise interest rates by more than expected as inflation has continued to climb.



Yields remain unattractive compared to other markets. Slowing global growth also remains a risk.


US inflation linked bonds

We have retained our neutral score. With US 10-year real rates above 1%, we believe that inflation expectations are now more realistic.


Emerging markets local currency bonds

Although Latin America shows signs of peaking inflation, our outlook on Central & Eastern Europe, Middle East & Africa remains negative.


Investment grade credit



We retain our positive stance as valuations are attractive. Although corporates appear to be fundamentally solid, we are holding back on investing until we see the impact of the upcoming rate rises.



Our score remains positive as the level of spreads (the difference between the quoted rates of return on two different investments, usually of different credit qualities but similar maturities) means investors can earn a reasonable return. Fiscal intervention and moderating gas prices also improve the case for European IG.


Emerging markets USD

Although emerging markets have struggled with the strong dollar, geopolitical tensions have already been priced in and we remain positive due to valuations.


High yield bonds (non-investment grade)



We remain positive as US HY has experienced punishing outflows combined with lighter issuance (supply), which is supportive for valuations.



Our view remains neutral as European interest rate sensitivity does not currently appear to be a cause for concern.





We retain our positive score as the collapse in demand has been as severe as expected. OPEC is also attempting to reduce production quotas to support oil prices.



Although gold has been resilient in the current economic climate, it is less attractive compared to current cash yields. Therefore, we remain neutral for now.


Industrial metals

We remain neutral given current growth risks.



We retain our positive stance given the very tight supplies and low inventory levels.




US $

We remain neutral, noting that the dollar can be used to limit risk when sentiment is negative, but is likely to weaken once it appears that rate rises have slowed inflation and the US economy sufficiently to allow the Fed to halt its hiking cycle.


UK £

We have downgraded to negative as we believe that the BoE’s MPC may disappoint on rate rises given the very high level of UK inflation.


EU €

We remain neutral as we expect volatility in the euro to subside as concerns over energy supplies in Europe abate.



We have upgraded back to neutral as our view on the trade cycle has now largely played out.



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


Swiss franc ₣

We retain our neutral stance as we expect the SNB to disappoint on rate hikes, which will suppress the franc.


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