Blog U.S. Housing: Potential Opportunity Amid Cautious Economic Outlook Even as the probability of a recession in the near-term remains low, we believe investors should look to sectors that are likely to be resilient in periods of higher volatility.
Even as the probability of a recession in the near-term remains low, we believe investors should look to sectors that are likely to be resilient in periods of higher volatility. One area in which we see a potential opportunity is U.S. housing, where fundamentals remain sound. Demand is outpacing supply, and it remains cheaper to buy a home than to rent one (see chart). Furthermore, while recession risks have risen, we don’t see the same kind of imbalances in the real economy that we have seen in previous recessions: There is no over-borrowing, overconsumption or over-investment. Also, while the pace of home price gains is slowing and the pace of housing-related activity is slowing, valuations in the U.S. housing market look reasonably attractive. As a result, we think this is a sector that will exhibit resiliency even if we were to get into a sustained period of weak economic growth or even a period of higher interest rates. What it means for investors With rising volatility and stretched valuations, we believe investors should emphasize flexibility and consider sectors like U.S. mortgages that have solid fundamentals and are less affected by swing factors like politics or trade. For more insights into the factors that inform our favorable view of the housing market, watch “Quick Takes: Will Rising Rates Hurt the Housing Market?” Watch Now
Blog The ECB Is Not Done Yet The European Central Bank raised its policy rate, and more hikes are coming.
Blog Fed Seeks to Balance Competing Risks Investors face mixed signals between the Federal Reserve’s policy guidance and recent economic developments.
Blog Trying to Make Apple Juice From Oranges: The Problem With Comparing Market Pricing and Fed Projections As investors seek to pinpoint market expectations for Federal Reserve policy, it’s critical to consider not just rate projections and derivatives pricing, but the degree of uncertainty and distribution of outcomes.
Viewpoints The U.S. Debt Ceiling Debate: Expecting Resolution, Appreciating the Stakes We believe Congress will reach an agreement before the debt limit is reached, but markets could face turbulence later this year.
Strategy Spotlight Income Fund Update: A New Bond Cycle Is Dawning We believe fixed income markets offer higher yields and better valuations than in years, and we’ve positioned the Income portfolio to further benefit amid potential for volatility and a weakening economy.
Blog Dollar Strength: Sum of All Fears The dollar is set to weaken as fears over last year’s shocks abate.
Blog European Outlook: Less Downside Now, But Caution Still Warranted Focusing on high quality and liquidity when taking risk in portfolios will be key in 2023, as pressure on monetary policy remains intense.
Viewpoints Staying in Place – The Post‑Pandemic Housing Market We expect further weakening in U.S. home prices, although not a sharp decline, as higher mortgage rates pressure affordability and induce many homeowners not to move.
Viewpoints U.S. Housing Outlook: No Bust After the Boom Home price fundamentals suggest appreciation will slow but remain resilient.
Blog Fed Seeks to Balance Competing Risks Investors face mixed signals between the Federal Reserve’s policy guidance and recent economic developments.