What Do We Expect By Year-End? The Most Likely Scenario: Equity markets are likely to end the year up (with a fair amount of range trading). There will be a rotation of sector leaders. Fixed income bonds will end the year marginally tighter, both IG and HY. The most challenging sectors will remain sovereigns and financials, while industrials, consumer, and tech will outperform. The current softness in the U.S. economy is likely to moderate if it is indeed caused by exogenous factors: Global supply chain and weather volatility. Elevated oil prices will remain a drag on growth. If the global economy recovers at a stronger pace than expected, investors will be drawn into equities over fixed income.
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