In a mid-year update, KKR’s Global Macro and Asset Allocation team forecasts what the future holds
To say the macroeconomic landscape has been challenging for investors and asset allocators would be an understatement. Factors such as sticky inflation, ongoing supply chain constraints, rising interest rates, and continuing geopolitical upheaval — all converging during a time of slower-than-expected economic growth and a changing relationship between stocks and bonds — have led many financial professionals to consider whether now is the time to modify their approaches to constructing their portfolios.
Henry McVey, Head of Global Macro & Asset Allocation and KKR, agrees. In KKR’s mid-year macroeconomic update, McVey provides insight into how financial professionals can prepare for the months ahead and offers some predictions on how the ‘choppy’ market conditions will play out. Among the biggest predictions? That corporate profits will take a hit due to unwelcome inflation and investors may need to rethink the traditional 60/40 asset allocation mix. Other out-of-consensus calls include:
- The market has yet to price in broad-based margin deterioration
- Oil prices could be higher for longer
- Inflation headwinds shifting from goods to services
- Materially higher yields for the German bund in 2023
Watch the full replay of the Mid-Year Update 2022 to get a full picture of the macroeconomic landscape, and to learn about the research, perspectives, and insight, from the KKR team.