The Market Call | December 2023

Macroeconomy

New economic data suggesting that Q2-2023 GDP weakness as an outlier has boosted confidence. NG’s ramping up of infrastructure spending (+20% growth YoY in August-October) will likely continue for the rest of 2023 and should hit 5.0% of GDP, as its debt ratio falls to 60.3% by yearend.

Fixed Income Outlook

Softer inflation print and “normal” VIX volatility index likely prodded Fed officials to project up to 75 bps policy rate cuts in 2024, boosting investor confidence as interest rates hurtled by some 107 bps through mid-December from its October peak.  This should help sustain the local bond market rally, buttressed also by markedly lower inflation and interest rates.

Equities Outlook

2023 looks poised to conclude without major new developments, despite global interest rates and crude oil prices on a downward trek. Investors will likely wait for 2024 developments amid robust corporate earnings and low valuations and robust GDP growth in 2023.