We doubt the surge in the yields of developed market high-grade government bonds over the past week marks the start of a return to the pattern of the first three quarters of 2022. Instead, we forecast that those yields will drop back in 2023, to levels that are typically below those that they reached earlier this month after trending down in October and November. We don’t envisage big declines in yields, though, even after the latest sell-off. So, we don’t see a retreat in them giving stock markets much respite. Indeed, we suspect equities will remain under pressure in the coming months as recessions take hold.
The next edition of the Capital Daily will be published on 3rd January 2023 after the holiday period.
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