Core views 2023 10 | 11 Credit Suisse House View in short Economic growth Fixed income Foreign exchange Real estate We expect the Eurozone and UK to have slipped into With inflation likely to normalize in 2023, fixed The USD looks set to remain supported going into We expect the environment for real estate to recession, while China is in a growth recession. income assets should become more attractive to hold 2023 thanks to a hawkish US Federal Reserve and become more challenging in 2023, as the asset These economies should bottom out by mid-2023 and offer renewed diversification benefits in portfoli- increased fears of a global recession. It should class faces headwinds from both higher interest and begin a weak, tentative recovery – a scenario os. US curve “steepeners,” long-duration US stabilize eventually and later weaken once US rates and weaker economic growth. We favor listed that rests on the crucial assumption that the USA government bonds (over Eurozone government monetary policy becomes less aggressive and over direct real estate due to more favorable manages to avoid a recession. Economic growth will bonds), emerging market hard currency debt, growth risks abroad stabilize. JPY weakness should valuation and continue to prefer property sectors generally remain low in 2023 against the backdrop investment grade credit and crossovers should offer persist in early 2023, but eventually reverse as the with strong secular demand drivers such as logistics of tight monetary conditions and the ongoing reset interesting opportunities in 2023. Risks for this Bank of Japan alters its yield curve control policy. real estate. of geopolitics. asset class include a renewed phase of volatility in We expect emerging market currencies to remain rates due to higher-than-expected inflation. weak in general. Inflation and central banks Private markets & Equities Commodities hedge funds Inflation is peaking in most countries as a result of decisive monetary policy action, and should eventu- We see 2023 as a tale of two halves. Markets are Commodity baskets offered protection against In a more volatile 2023, we see opportunities for ally decline in 2023. Our key assumption is that it likely to first focus on the “higher rates for longer” inflation and geopolitical risk in 2022. In early 2023, active management to add greater value, particularly will remain above central bank targets in 2023 in theme, which should lead to a muted equity perfor- demand for cyclical commodities may be soft, while for secondary managers, private yield alternatives most major developed economies, including the mance. We expect sectors and regions with stable elevated pressure in energy markets should help and low-beta hedge fund strategies. For seasoned, USA, the UK and the Eurozone. We do not forecast earnings, low leverage and pricing power to fare speed up Europe’s energy transition. Pullbacks in risk-tolerant investors, we also highlight co-invest- interest-rate cuts by any of the developed market better in this environment. Once we get closer to a carbon prices could offer opportunities in the ments, i.e., direct investments in an unlisted compa- central banks next year. pivot by central banks away from tight monetary medium term, and we think the backdrop for gold ny together with a private equity fund. policy, we would rotate toward interest-rate-sensitive should improve as policy normalization nears its end. sectors with a growth tilt.