Q1 2023 equity market outlook: Central banks raise recession expectations
Central banks have repeatedly raised rates to cool inflation. But have they gone too far? The Concentrated Alpha equity team looks at potential consequences.
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- Global Manufacturing Purchasing Managers Index (PMI)
- Average Rate on Outstanding Mortgages and the 30-Year Fixed Mortgage Rate 1992 through late-November 2022
- Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications – US
- Shelter and services contribution to US core CPI inflation
- US retail sales – nominal and real (adjusted for inflation)
From too little, too late, to far too much
From too little, too late, to far too much
Central banks’ efforts to contain inflation are backward-looking and are reigniting fears of a recession
Global Manufacturing Purchasing Managers Index (PMI)
![Line chart of the Global Manufacturing Purchasing Managers Index (PMI) from May 2017 through November 2022.](/us/en/assetmanagement/insights/asset-class-perspectives/equities/articles/q1-2023-equity-market-outlook/_jcr_content/mainpar/toplevelgrid_copy_31/col1/textimage/image.580.png/1674670353830.png)
Record rise in costs for new mortgages: Buying or refinancing a house has become more expensive
Record rise in costs for new mortgages: Buying or refinancing a house has become more expensive
Average Rate on Outstanding Mortgages and the 30-Year Fixed Mortgage Rate 1992 through late-November 2022
![Average Rate on Outstanding Mortgages and the 30-Year Fixed Mortgage Rate 1992 through late-November 2022.](/us/en/assetmanagement/insights/asset-class-perspectives/equities/articles/q1-2023-equity-market-outlook/_jcr_content/mainpar/toplevelgrid_copy_31/col1/textimage_copy/image.580.png/1674670353927.png)
Consequently, US housing transactions are falling sharply
Consequently, US housing transactions are falling sharply
Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications - US
![US line chart shows the number of mortgage applications per week from 2017 through December 2022.](/us/en/assetmanagement/insights/asset-class-perspectives/equities/articles/q1-2023-equity-market-outlook/_jcr_content/mainpar/toplevelgrid_copy_31/col1/textimage_1405692454/image.580.png/1674670354100.png)
Meanwhile US Core inflation has stabilized as goods inflation starts to reverse
Meanwhile US Core inflation has stabilized as goods inflation starts to reverse
Shelter and services components continue to rise, but should slow later this year
![Line chart showing the contributions of shelter, services, goods ex-autos and autos to core consumer price index inflation.](/us/en/assetmanagement/insights/asset-class-perspectives/equities/articles/q1-2023-equity-market-outlook/_jcr_content/mainpar/toplevelgrid_copy_31/col1/textimage_1405692454_87492930/image.580.png/1674670354206.png)
Inflation covers up economic weakness: nominal sales vs. real sales
Inflation covers up economic weakness: nominal sales vs. real sales
US retail sales – nominal and real (adjusted for inflation)
![A line chart tracks actual US retail sales and sales adjusted for inflation.](/us/en/assetmanagement/insights/asset-class-perspectives/equities/articles/q1-2023-equity-market-outlook/_jcr_content/mainpar/toplevelgrid_copy_31/col1/textimage_1405692454_727262131/image.580.png/1674670354314.png)
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