When markets resist recession risk, macro analysis is pivotal

Asset prices are seemingly defying the global economic gloom, making analysis of macro indicators important in understanding how market conditions might evolve. In the latest quarterly edition of Simply put, we explain our current multi-asset portfolio positioning and the integration of a new, proprietary real-time macro overlay into our investment process. Key topics include:

• As rapid, broad rotations continue to characterise markets in 2022, we remain cautious. Higher yields and cash rates have the potential to improve the risk-reward balance in fixed income, but price signals across asset classes and our drawdown-management process lead us to proceed carefully
• These conditions reinforce our belief in an investment process that can adapt efficiently to different risk regimes. As macro indicators warn of an imminent recession, our proprietary ‘nowcasting’ indicators provide real-time information about global growth, inflation and monetary-policy moves
• The nowcasters underpin a new systematic input: our Macro Risk Premia overlay. By assessing the sensitivity of risk premia to changes in the economy, it is intended to help us better adapt to economic change. Drawing on macro data rather than price signals in financial markets, it diversifies our range of dynamic overlays.

For more, read the Q4 issue of Simply put using the download button provided.

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