Markets

MUFG issues capital market outlook for 2023–‘New macro supercycle’

  • It predicts the most successful global series of mild recessions in decades
  • 2024 looks likely to be the time for a broad, sustained recovery
  • He predicts a “tale of two cities” in credit markets

NEW YORK, January 23, 2023 /PRNewswire/ — Mitsubishi UFJ Financial Group’s (MUFG) (NYSE: MUFG) capital markets strategy team released its 2023 outlook titled “New Macro Supercycle” providing a forward-looking perspective on the global economy, monetary policy and markets in the coming a 12-month period—and highlighting the prevailing themes that will drive the world’s economic environment over the next decade.

“The ‘great moderation’ of low inflation and volatility over the last 40 years is over,” he says Tom Joyce, Head of Capital Market Strategy. “After the ‘polycrisis’ of 2022, which resulted from simultaneous geopolitical, energy and economic shocks, we entered a more clearly defined period for economies and markets.

Joyce adds that while the previous year was challenging, fears of a recession in 2023 are likely to be less of a concern and more reflected in asset prices than unexpected inflation and US Federal Reserve tightening in 2022. In addition, he says, we start 2023 with positive surprises in the world’s three largest economies: rapidly declining inflation in the US, the reopening of the China and lower energy prices than warm winter weather in Europe.

Key Takeaways

Key observations from the Capital Markets Strategy team include five of the following areas:

  1. New “macro supercycle”: Joyce and his team highlight dozens of new, pervasive themes that will drive the global economy and markets over the next decade, including a shift to quantitative tightening, ever-increasing inflation, greater volatility, shorter business cycles, more rigorous investor oversight, long-term commodity supply constraints, fragmented globalization, structural deficiencies in the labor market and the shift of the center of gravity of the global economy to the east.
  2. Global economy: The team predicts a series of mild, fastest-paced recessions in decades, and sees 2024 as a more likely moment for a broad, sustained global recovery.
  3. Global Monetary Policy and US Public Policy: In the team’s view, the historic tightening of monetary policy from 2022 will be more felt in 2023, as monetary policy operates with a 12-18 month lag. U United Stateswith a divided Congress and narrow majorities in both houses, the team expects very limited fiscal support and greater complexity in regular legislation in 2023.
  4. Credit markets: The team predicts a “tale of two cities”, noting that, on the one hand, investors are entering the new year with a clean slate to put money into strong corporate balance sheets that offer more attractive yields than at any time since the global financial crisis. the crisis of 2008-2009. However, the team also notes that as the year progresses, slowing earnings and margin compression will put pressure on a credit cycle that is poised to change. In this context, the team believes that pre-funding strategies are particularly important in 2023.
  5. Global financial markets: The team reiterates research from MUFG’s US Macro Strategy team with views for the year ahead that include US Treasury yields, bearish credit spreads, a weakening US dollar and diverging commodity paths as a result of mixed pressures—both upside and downside—on various commodity groups by region, such as natural gas in United States and Europe.

You can access the full report here or by using the following link:
https://vvv.mufgamericas.com/sites/default/files/document/2023-01/nev-macro-supercicle-final.pdf

Press contact:

Asaf Kedem
D: +1 212-782-4926
M: +1 917-685-4388
[email protected]

About MUFG and MUFG of America
Mitsubishi UFJ Financial Group, Inc. (MUFG) is one of the world’s leading financial groups. Based in Tokyo and with over 360 years of history, MUFG has a global network of approximately 2,100 locations in more than 50 countries. MUFG has nearly 160,000 employees and offers services including commercial banking, trust banking, securities, credit cards, consumer finance, asset management and leasing. The Group aims to “be the most trusted financial group in the world” through the close cooperation of our operating companies and flexibly respond to all the financial needs of our clients, serving society and encouraging joint and sustainable growth for a better world. Trading in MUFG shares on Tokyo, Nagoyaand New York the stock market.

MUFG’s operations in the Americas, including its US offices, Latin Americaand Canada, are primarily organized within MUFG Bank, Ltd. and subsidiary, and are focused on global corporate and investment banking, Japanese corporate banking and global markets. MUFG is one of the largest foreign banking organizations in America. For locations, banking options and services, career opportunities and more, visit www.mufgamericas.com.

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