2023 Fourth Quarter Market Outlook | Active Wealth Partners | Bill Achtymichuk

The big question investors are presently asking is, have central bankers globally been successful in bringing the high inflation rates of 2022 and early 2023 down and will they achieve their two percent inflation rate target going forward with the current level interest rates are set at.

The answer is “currently not known”. Things look promising but we are not yet at a two percent inflation rate in North America and once we get there, can we keep inflation under control to stay at two percent or lower for an extended period.

If the answer is “eventually yes”, then interest rates have peaked at these current levels. That is good news, and I would expect to see bonds and stocks to move higher over the next six to twelve months. If the answer is “no”, then inflation is still above the two percent target and interest rates will be going higher which would dampen any potential bond and stock rally.

It is my opinion that the heavy lifting in increasing interest rates is done. There may be one or two small quarter point increases still to come, but the markets have factored that potential in. Going forward, I see central bankers being very slow in lowering interest rates as they reach their two percent inflation target. Their goal is to prevent any possible snap back in inflation like what occurred in the late 1970’s/ early 80’s.

This resistance to lower interest rates going forward is where the risk lies. If global economies start to slow down going forward, central bankers may be late in providing any stimulus to the economy. Central bankers would lower interest rates to provide economic support, but it may be too late as interest rate moves take up to a year to show their full impact.

Stock and bond markets anticipate events, so the markets are starting to factor in when interest rates will drop. I am expecting rates to drop over the next year or two, which should be good for the bond and stocks you hold in your portfolios.

If you have any questions or concerns, please feel free to contact me.

Best regards,

Bill Achtymichuk, CIM®, FCSI®, CFP®

Portfolio Manager / Senior Wealth Advisor

iA Private Wealth | Active Wealth Partners

Insurance Advisor| iA Private Wealth Insurance*

5470 Calgary Trail NW, Suite 202

Edmonton AB, T6H 4J8

T: 780-944-2690

F: 780-413-4497

TF: 800-474-2690

bachtymichuk@activewealthpartners.com