Repricing Growth and Inflation: Market Convergence

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In the research paper "Converging Expectations," UBP delves into the recent reversal of stock and bond market gains due to renewed inflation concerns. The main theme of the text is the convergence of expectations between risky and risk-off assets in response to stronger than expected economic data. With rate hikes expected to continue through end-2023, the market is looking towards ongoing economic strength.

The Tug of War: Growth, Inflation, and Policies

The second half of the text discusses the volatility experienced in January, allowing hedge fund allocations to shelter portfolios. As markets reprice growth and inflation expectations, the author remains cautious on equities due to the deteriorating earnings picture and rising real interest rates in the US and Europe. Additionally, the text highlights the unfolding tug of war between growth, inflation, and policies in the Euro area and the potential opportunities for agile investors.