November 2023 Chartpack

Equity Long/Short Hedge funds participated in the rally.

The massive and widespread decline in Treasury yields across maturities powerfully influenced the broader asset rally by emphasizing slowing inflation and peak central bank tightening.

Two scenarios dominate probabilistic outcomes going forward. Either US economic activity contracts severely to result in a severe US recession or US economic activity contracts gradually resulting in a shallow recession. In both scenarios US interest rates will be falling, especially short-term rates. A severe recession will cause a downdraft in equities while a shallow one is currently priced into equity markets.

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