2023 Global Market Outlook

The Need for Agility

Markets have priced in a significant economic slowdown in 2023. But we see potential opportunities for agile investors.

Four Key Investment Themes

There's never been a spike in inflation above 5% that didn't trigger recession. Despite the high chances of an economic slowdown, there are still ways for investors to play offense in 2023.

Central banks are struggling to control inflation without pushing the economy intro recessions with 7.7% CPI and 6 U.S. Federal Reserve Hikes in 2022, as of October 2022.
"We know from history that regime changes nearly always are associated with changes in market leadership." Justin Thomson, Head of International Equity and CIO

The trend towards higher inflation and interest rates has major implications for investors. In our view, significant equity opportunities still can be found in this shifting paradigm.

A brutal year for bond markets in 2022 ended with a silver lining: Fixed income yields rose to some of the most attractive levels since the global financial crisis. We see several ways to take advantage.

“I think underinvested segments of [investors] are beginning to move into fixed income and will probably continue to do that. I would advise patience and being opportunistic.” Andrew McCormick, Head of International Fixed Income and CIO
Chart depicts New York Federal Reserve Global Supply Chain Pressure Index from 2018 to October 2022. Highlighting a standard deviation of 4.30 in December 2021 that had lowered to 1.0 in October 2022.

Recent events are causing a profound reconfiguration of supply chains across the globe. Adaption will create new winners and losers across industries—and new opportunities for skilled active managers.  

Catch the most important takeaways from the 2023 Global Market Outlook in under two minutes with Ritu Vohora.

Tactical Allocation Views

As of November 30, 2022

The tactical allocation views are prepared by the T. Rowe Price Multi-Asset Division and informed by a subjective assessment of the relative attractiveness of asset classes and subclasses over a 6- to 18-month horizon.


Stocks remain vulnerable amid tightening liquidity, slowing growth, and higher rates. However, these headwinds should peak and subsequently ease in the latter half of 2023, which may provide an opportunity to add to equity exposures.

The balance between central bank tightening, high inflation, and slowing growth could produce rate volatility. Higher yields, especially for high yield bonds, are supported by strong fundamentals and can help provide a buffer against credit weakness.

This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action. 

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Haver Analytics – (Ministry of Health, Labour & Welfare, Statistical Office of the European Communities, Bureau of Labor Statistics, US Bureau of Labor Statistics, US Bureau of Economic Analysis, European Central Bank, Standard & Poor’s Bureau of Economic Analysis, Federal Reserve Board, Tax Policy Center and Citizens for Tax Justice, China National Bureau of Statistics, Bank of Korea)/Haver.

Important Information

This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.

The views contained herein are those of the authors as of December 2022 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.

Risks: International investments can be riskier than U.S. investments due to the adverse effects of currency exchange rates, differences in market structure and liquidity, as well as specific country, regional, and economic developments. These risks are generally greater for investments in emerging markets. Small-cap stocks have generally been more volatile in price than the large-cap stocks. The value approach to investing carries the risk that the market will not recognize a security's intrinsic value for a long time or that a stock judged to be undervalued may actually be appropriately priced. Sustainable investing may not succeed in generating a positive environmental and/or social impact.

Fixed income securities are subject to credit risk, liquidity risk, call risk, and interest rate risk. As interest rates rise, bond prices generally fall. Investments in high yield bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.  In periods of no or low inflation, other types of bonds, such as US Treasury bonds, may perform better than Treasury inflation protected securities.  Investments in bank loans may at times become difficult to value and highly illiquid; they are subject to credit risk, such as nonpayment of principal or interest, and risks of bankruptcy and insolvency. Diversification cannot assure a profit or protect against loss in a declining market.  

This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types; advice of any kind; or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.

Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy.

Past performance is not a reliable indicator of future performance. All investments are subject to market risk, including the possible loss of principal. Actual future outcomes may differ materially from any estimates and forward-looking statements made. All charts and tables are shown for illustrative purposes only.

T. Rowe Price Investment Services, Inc. 

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