Pessimism prevails as stock market sages look to 2023

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‘Seduction of pessimism’ prevails as stock market sages look to 2023 via IrishTimesBiz

Over on US debt markets a powerful recession indicator that has been flashing red for months is now at levels last seen in the early 1980s. The market interest rate, or yield, on 10-year US government bonds is now about 0.8 percentage points lower than on 2-year notes.

A flurry of 2023 stock market outlooks that have been pushed out by investment banks and securities firms to clients are read-through-your-fingers pieces. A terminal rate refers to the level at which the Fed is expected to stop raising interest rates. Consumer price inflation in the US was running at an annual rate of close to 8 per cent in October. Figures out on Friday showed that producer prices rose by a greater-than-expected 7.4 per cent in November.

Over on this side of the Atlantic, the consensus view among 14 strategists polled by Bloomberg this week is that the pan-European Stoxx 600 index will end 2023 little changed from current levels – with further losses in the first half of the year followed by a recovery in the second. But some market observers are beginning to posit that recency bias may be clouding analysts’ outlooks a bit too much.

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