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Global Equity Vol Outlook: Can the pain trade(s) continue in 2H23?
Late-cycle investing is very challenging, and the first half of 2023 has been a classic case. Very few of the assumptions built into consensus at the beginning of the year have materialised, resulting in an unending list of pain trades throughout the period – lower volatility, higher US equities (lower Chinese equities), outperformance of cyclical vs defensive sectors, lower commodities, and higher rates. We have been expecting equity volatility to fall, and indeed recent developments indicate that that we are in a low-volatility ‘regime’. This has important implications: such a backdrop often leads to a ... (full story)