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9 January 2026

Home / White Papers 2023

Macro Perspectives: A changing inflation and growth climate

In the first half of 2023, investors faced aggressive US Federal Reserve (Fed) monetary policy tightening, consecutive quarters of falling corporate profits, two of the largest bank failures in US history, a near-default by the US federal government, and universal predictions of US and global recessions.

With these issues in mind, I moderated a panel of our leading economists including John Bellows, Portfolio Manager, Western Asset; Sonal Desai, Chief Investment Officer, Franklin Templeton Fixed Income; Michael Hasenstab, Chief Investment Officer, Templeton Global Macro; and Francis Scotland, Director of Global Macro Research, Brandywine Global. The key question I wanted to address: What’s in store for investors in the second half of 2023?

Below are my key takeaways from the discussion.

  • Inflation will continue to be an issue for the next 6–12 months.
  • While inflation is coming down in many countries, the global economic recovery is uneven.
    - China is struggling to find sources of economic growth.
    - Supply-chain rebuilding and friend-shoring should contribute to growth opportunities in some countries.
    - Japan benefited from recent increases in inflation after struggling with low economic growth for decades.
  • The upcoming economic data will likely provide further evidence of slowing growth and ongoing disinflation in the US.
  • Real interest rates are expected to continue increasing.
  • New investment opportunities.
    - Fixed income investments are resuming status as good portfolio diversifiers.
    - Selectively increasing duration offers an attractive total return.
    - High-yield debt is priced attractively as investors remain cautious about the economy.
    - Emerging markets can provide diversification.

Stephen Dover, CFA
Chief Market Strategist
Franklin Templeton Institute

Download the full paper

 

  •   24 August 2023
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