Q3 2023 | Global Macro Outlook: The long and winding road 

Resilience has always been viewed as a good thing. As asset allocators, it's our goal to construct portfolios that can withstand market events and do well in economic downturns. In this instance, however, resilience may not actually work in investors’ favor. The unexpected economic strength on display could—ironically—delay the path to recovery.

  • Recession postponed, not canceled

    Despite the aggressive monetary policy tightening we’ve seen so far, economic activity in developed economies has shown to be more resilient than expected amid a strong rebound in the services sector.

  • Inflation remains stickier than expected

    While headline inflation is easing, core inflation remains stubbornly high, and it isn’t just due to services inflation: Goods inflation is inflecting higher after a period of decline.

  • Unexpectedly hawkish central banks

    From the Bank of Canada to the Reserve Bank of Australia to Bank Negara Malaysia to the U.S. Federal Reserve, central banks around the world are proving to be more hawkish than expected.

  • A shifting geopolitical backdrop

    There are signs that we’re entering a new global regime, requiring a rethink of how risk assets respond to changes in the macro backdrop.

U.S. recession appears likely despite unexpected strength

Data year to date suggests that the U.S. economy had a better start to the year than expected. But we see this as a case of recession postponed rather than canceled.

Download our Q3 Global Macro Outlook

Three factors underpinning economic activity in the United States

“In our view, these tailwinds should dissipate as the lagged effects of monetary tightening filter through and the savings buffer that consumers have accumulated is run down.”

—Sue Trinh, Co-Head of Global Macro Strategy, Manulife Investment Management

Previous editions of "Global Macro Outlook"

Authors

The global macro strategy team provides global economic forecasts and research for the firm and sits within the multi-asset solutions team (MAST). The team’s analysis helps inform MAST’s positioning decisions as well as the investment views of other investment teams within Manulife Investment Management.

Additional viewpoints

Beyond the Fed’s hawkish “pause”: three macro elements to consider

The U.S. Federal Reserve kept rates steady at its June meeting. But looking deeper, there are implications for investors.
Read more

The Bank of Canada “unpauses”—what’s next?

After just a brief moment on the sidelines, the Bank of Canada has announced yet another 25-basis point rate hike. Our experts offer their take on what this means for the economy. Read more.
Read more

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