Morgan Stanley Research have just completed their outlook for 2022. Here you find an overview of their expectations for the year ahead across inflation, policy, asset classes and more.
“We think growth is strong in the US, the euro area and China next year, with all three of those regions exceeding consensus expectations.”
“We forecast developed market inflation to peak in the coming months and then actually decline throughout next year as supply chains normalize and commodity price gains slow.”
“We think moderating inflation and some improvement in labor force participation means that the Fed thinks it can wait a little bit longer to raise interest rates and doesn't ultimately raise rates until the start of 2023.”
“We think the case for stocks is stronger in Europe and Japan than in emerging markets or the US, as these former markets enjoy more reasonable valuations, more limited central bank tightening and less risk from legislation or higher taxes. Those same issues drive a below consensus forecast for the S&P 500. We think that benchmark index will be at 4400 by the end of next year, lower than current levels.”
“We remain positive on the US dollar and think that US interest rates will rise into the start of the year. We forecast the US 10-year Treasury yield to be at 2.1% by the end of 2022 and think the Canadian dollar will appreciate against most currencies as the Bank of Canada moves to raise interest rates.”
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