Looking ahead, and leaving behind the months of macroeconomic crisis, the dynamics of asset prices will be marked by whether we are heading for a soft landing or a hard landing in developed economies that is likely to culminate in a deep recession.
On the one hand, recent inflation data in the US opens a glimmer of hope towards the soft landing path which is a surprise for next year, as things seem to be not very clear.
Returns and asset classes will differ significantly depending on what kind of landing materializes in the global economy. However, what is very clear to us is that, after a very difficult year, fixed income is positioned as the most attractive asset class.
It is worth noting that, in a soft landing scenario, emerging market fixed income, particularly high yield bonds, have ample room to dominate in terms of positive returns.
In emerging markets, central banks in several countries have raised rates in the face of inflation, which has dampened growth and tightened financial conditions.