Market Commentary Q2 | 2023
In Review
Global equity markets continued to climb the wall of worry in the 2nd quarter. The banking stress in the aftermath of the SVB failure seems to have resulted in limited lending restraint thus far. Additionally, the bipartisan agreement to suspend the US debt ceiling until 2025 means another potential negative demand catalyst has been avoided. Thus, market participants have been focused on the reality of global economic growth that continues to be below trend but non-recessionary. Inflation has continued to normalize while labor markets remain intact, meaning a soft landing remains a possibility. As the immediate economic growth outlook continues to improve, equity market volatility has been subdued and risk appetite has increased. At the same time, investor enthusiasm over the increasing adoption and investment in AI acted as a positive catalyst for global equity markets. While short-term risks are receding, stretched valuations and a cloudy medium-term macroeconomic outlook should temper enthusiasm about going all in on risk assets.