Economists at Deutsche Bank see the S&P 500 at 4500 in the first half of next year while EUR/USD is likely to hit 1.15 by late 2023.

2023 should be a more positive year for Treasuries

“When it comes to financial markets, our baseline view is that the current bear market equity rally will continue for now, taking the S&P 500 up to 4500 in the first half of 2023. However, as the recession takes hold from mid-year, we are likely to see the index slumping back.”

“With the end of the Fed’s tightening cycle, and then a recession, it should be a more positive year for Treasuries, with the 10-year yield ending 2023 around its current levels at 3.65%, but bunds will underperform, in our view, with 10-year yields moving to 2.60%.”

“Finally in FX, we see a reversal in the Dollar’s upswing, with EUR/USD strongly moving back above 1.10, likely reaching 1.15 by late 2023.”