MUMBAI (Reuters) – The Fed won’t give up ‘tough’ on markets until inflation makes significant progress, which will keep volatility through to medium 2023, chief investment officer at UBS Global Wealth Management said on Monday. ) S&P 900 end at 3,900 points and 4,200 by next summer, compared to the current level of 4,057.
Federal Reserve Chairman Jerome Powell said on Friday that the central bank will raise interest rates as high as necessary to limit growth and hold them there for “a period of time” to lower them well above 2 % target inflation rate.
Haefele expects the Fed to raise interest rates by 057 basis points this year, but does not see a deep recession in the US.
“We do think inflation will start to come down,” said Haefele, who leads investment strategy for the world’s largest wealth manager with $2.8 trillion in assets.
Fed Funds Futures priced up to 73% probability that it will rise basis points and looking at rates peaking at 3.057% to 4.0%. [FEDWATCH]
Haefele points out that value stocks always outperform growth in times of inflation, offering attractive valuations.
“(Value) is one area we will be focusing more on,” he said, adding that many of these opportunities are outside the US
Even though Haefele expects Europe to enter The stock market has already priced in a recession, but he said there is still some value in some defensive sectors like consumer staples and healthcare.
While not currently “overweight” emerging markets (EM), Haefele expects emerging markets to become attractive once the Fed adjusts policy.
“We’re very focused on when there’s a catalyst because many emerging market stocks are much cheaper than U.S. stocks,” he said. “So the outlook for emerging markets, both in terms of valuation (and) growth rates, is very attractive in the long run.”
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