Another look at the prospects for equity sector performance

A continuation of last week’s twin slump in US “risk-free” real government bond yields and global high-yield credit spreads would be a relative boon for comparatively rate-sensitive, cyclical sectors of the MSCI World Index. However, our view is that over the next three to six months “risk-free” rates won’t fall much further while credit spreads rebound amid a deteriorating economic backdrop. The upshot is that we think defensive sectors of the stock market may hold up best in that time.

China Drop-In (29th Nov.): Join our special briefing on the global macro and market consequences of China’s latest zero-COVID lockdowns. Register here.