Special Report

Q2 2023 Global Macro Report

August 2023
Contents

Economic Performance and Outlook 02

Global Macro Outlook – GDP Growth, Inflation, Unemployment, and PMI

Asset Classes Performance 08

Broad Asset Class Returns and Overview

Equities 10
Performance of Major Equity Indices

Bonds 13
Performance of Government Bond Yields and Major Bond Indices

Currencies 15
Performance of Currencies

Commodities 17
Performance of Oil, Precious Metals, and Base Metals

1 Special Report | Q2 2023 Macro Report | August 2023

GLOBAL MACRO OUTLOOK
Global economic growth to slow and inflation to decline

 According to July’s World Economic Outlook, the IMF projects global growth to fall from an estimated 3.5% in 2022 to 3.0% in
There is a global slow down as 2023 and remain the same in 2024. The organization expects inflation to decrease to 6.8% in 2023 and 5.2% in 2024.
 The global recovery is reeling, with growing disparities between economic regions and sectors. The increase in central banks’
the effect of rate hikes in the
policy rates to tame inflation negatively impacts the economic growth.
developed world becomes  China’s economic activity slowed with consumption faltering and sectors, such as real estate, struggling. Investors
apparent increasingly expect the Chinese government to provide a fiscal stimulus.
 Monetary tightening by major central banks is resulting in declining inflation levels.

 IMF estimates that advanced economies to face substantial growth slowdown in 2023, with overall growth falling from 2.7% in
2022 to 1.5% in 2023. About 93% of advanced economies are expected to record slow growth in 2023, whereas 1.4% growth
is anticipated in 2024.
Advanced economies expected
 Growth in the US will drop from 2.1% in 2022 to 1.8% in 2023, an upward revision of 0.2% from the April’s IMF prediction.
to have subdued growth in 2023  Euro area growth is expected to fall sharply from 3.5% in 2022 to 0.9% in 2023.
 Growth in the UK is estimated to fall from 4.1% in 2022 to 0.4% in 2023.
 Japan is an exception to the downward trend with growth expected to increase from 1.0% in 2022 to 1.4% in 2023.

 IMF expects emerging and developing economies to grow at 4.0% in 2023, the same as in 2022.
 China's economic growth expected to rise from 3.0% in 2022 to 5.2% in 2023 due to eased COVID-19 restrictions.
Growth is projected to decline
 Growth in India is expected to fall from 7.2% in 2022 to 6.1% in 2023.
marginally in emerging and
 Russia's growth to increase from −2.1% in 2022 to 1.5% in 2023.
developing economies  Latin America and Caribbean is expected to expand 1.9% in 2023 from 3.9% in 2022. Brazil's growth anticipated to decline
from 2.9% in 2022 to 2.1% in 2023.

 IMF expects global inflation to slow. However, core inflation may decline slower.
 The risks to world economic growth remain high. Shocks, such as weather-related occurrences or an escalation in the Russia–
Inflation easing since H2 2022, Ukraine war, may cause inflation to increase, forcing policymakers to continue restrictive polices. Unresolved real estate
but remains above target levels issues could delay China's recovery, with detrimental cross-border ripple effects.
 Alternatively, domestic demand may prove resilient and inflation may decline quicker than anticipated, allowing a loose
monetary policy.

Source: International Monetary Fund

2 Special Report | Q2 2023 Macro Report | August 2023

GLOBAL MACRO OUTLOOK
2023 economic growth to be slower than that of 2022 for most economies

GDP Growth (%) Inflation (%) Unemployment Rate (%)

Country
2021 2022 2023 2021 2022 2023 2021 2022 2023

Brazil 5.00% 2.90% 2.10% 8.30% 9.28% 5.03% 13.20% 8.10% 8.40%

Canada 5.00% 3.40% 1.70% 3.40% 6.80% 3.90% 7.40% 5.10% 5.20%

China 8.40% 3.00% 5.20% 0.85% 1.88% 1.99% 5.10% 5.50% 5.20%

France 6.40% 2.50% 0.80% 2.07% 5.90% 5.05% 7.90% 7.20% 7.07%

Germany 2.60% 1.80% -0.30% 3.21% 8.67% 6.19% 3.60% 5.50% 5.63%

India 9.10% 7.20% 6.10% 5.51% 6.67% 4.95% 7.90% 8.30% 7.70%

Japan 2.20% 1.00% 1.40% -0.24% 2.50% 2.73% 2.80% 2.53% 2.60%

Russia 5.60% -2.10% 1.50% 6.69% 13.77% 7.03% 4.80% 3.77% 3.53%

UK 7.60% 4.10% 0.40% 2.59% 9.07% 6.84% 4.50% 3.70% 3.80%

USA 5.90% 2.10% 1.80% 4.68% 7.99% 4.52% 5.40% 3.60% 3.57%

Source: International Monetary Fund, Bloomberg

3 Special Report | Q2 2023 Macro Report | August 2023

GDP GROWTH
US and Eurozone economies proved resilient in Q2 2023

US GDP GROWTH (%) EURO AREA GDP GROWTH (%)

33.4
12.2

6.3 6.7 6.9

4.5 1.9 2.2
2.3 3.2 2.6 2.0 2.4 0.8
0.1 0.5 0.6 0.4 0 0.3

-0.6 -0.1 -0.1

-1.6

-11.4
-31.4

Dec-20

Dec-21

Dec-22
Mar-21

Mar-22

Mar-23
Jun-20

Jun-21

Jun-22

Jun-23
Sep-20

Sep-21

Sep-22
Jun-20

Jun-21

Jun-22

Jun-23
Sep-20

Dec-20

Sep-21

Dec-21

Sep-22

Dec-22
Mar-21

Mar-22

Mar-23

 The US real GDP grew 2.4% y/y in Q2 2023, an increase from  In Q2 2023, the Euro area recorded a real GDP growth of 0.3%,
2.0% y/y growth in Q1 2022. A surge in consumer spending, compared to no growth in Q1 2023. The recovery was driven by
private inventory investment, federal, state, and local government high growth rates in France and Spain, while a stagnation in
spending, as well as non-residential fixed investment, were Germany offset the recovery, Euro area growth suffered due to
contributing factors to the real GDP growth. However, these consumer price inflation, primarily driven by rising energy and
increases were somewhat offset by declines in exports and food prices. Additionally, the European Central Bank’s (ECB)
residential fixed investment. Imports also reduced. Rising costs for sharp rate of policy tightening contributed to the challenges
goods and services resulted in increased consumer spending. faced by the region's growth.

Source: BEA, Eurostat

4 Special Report | Q2 2023 Macro Report | August 2023
 INFLATION
US and Eurozone inflation declined in Q2 2023

US INFLATION (%) EURO AREA INFLATION (%)

10.0 11.0

9.0 10.0
8.0
9.0
7.0
8.0
6.0
7.0
5.0
6.0
4.0

3.0 5.0

2.0 4.0
Jan-22

May-22

Jun-22

May-23

Jun-23

May-23
Jun-23
Dec-22

Jan-23

Jan-22

May-22

Jun-22

Dec-22
Jan-23
Oct-22

Oct-22
Nov-22

Nov-22
Feb-22

Mar-22

Feb-23

Mar-23

Feb-22
Mar-22

Feb-23
Mar-23
Jul-22

Sep-22

Jul-22

Sep-22
Apr-22

Aug-22

Apr-23

Apr-22

Aug-22

Apr-23
 Inflation in the US steadily declined in Q2 2023. On an annualized  Euro Area inflation is decreasing since October 2022. On an
basis, CPI rate fell from 5.0% in March to 3.0% in June. The June annualized basis, the inflation rate declined from 6.9% in March
reading is the lowest since March 2021. The US core consumer to 5.5% in June. This marks the lowest inflation reading since
price inflation, which excludes volatile items such as food and January 2022. However, the core inflation rate, remains high
energy, decelerated to 4.8% in June 2023, the lowest since October and rose to 5.4%, supporting the view that ECB policymakers
2021. A slowdown in food and fuel prices, as well as the prices of are likely to raise rates in the upcoming months. Falling energy
used cars and trucks was the primary reason for the fall in inflation. prices were a significant contributor to the decline in headline
inflation.

Source: U.S. Bureau of Labor Statistics, Eurostat, Bloomberg

5 Special Report | Q2 2023 Macro Report | August 2023
UNEMPLOYMENT
Euro area unemployment hits record low

US UNEMPLOYMENT (%) EURO AREA UNEMPLOYMENT (%)

4.2 7.0

4.0
6.8

3.8
6.6
3.6

6.4
3.4

3.2 6.2
Jan-22

May-22

Jun-22

Jan-23

May-23

Jun-23
Dec-22
Oct-22
Feb-22

Mar-22

Nov-22

Feb-23

Mar-23
Jul-22

Sep-22
Apr-22

Aug-22

Apr-23

Jan-22

May-22

Jun-22

May-23

Jun-23
Jul-22

Sep-22

Dec-22

Jan-23
Apr-22

Aug-22

Oct-22

Apr-23
Nov-22
Feb-22

Mar-22

Feb-23
Mar-23
 The US unemployment rate rose to 3.6% in June from 3.5% in  Euro area’s unemployment rate declined in Q2 2023 to a record
March. Despite the significant increase in interest rates, the low of 6.4% in June from 6.6% in March. Despite the weakness
unemployment remained largely steady since March 2022, in the region’s economy, the labor market remained strong as
indicating the strength of the US labor market. In June, the number indicated by declining unemployment. The number of
of unemployed persons declined by 140,000 to 5.96 million and the unemployed declined to 11 million, which is the lowest
number of employed people rose by 273,000 to 160.99 million. The unemployment in Euro area since 1995, when the records
labor force participation was 62.6%. The average hourly wage for all began.
employees on private nonfarm payrolls increased 0.4% to USD 33.6.

Source: U.S. Bureau of Labor Statistics, Eurostat, Bloomberg

6 Special Report | Q2 2023 Macro Report | August 2023
MANUFACTURING PMI
Manufacturing output contracts in June

2022 2023
Country
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Global 53.2 53.7 53.0 52.3 52.4 52.2 51.1 50.3 49.8 49.4 48.8 48.7 49.1 49.9 49.6 49.6 49.6 48.8

Brazil 47.8 49.6 52.3 51.8 54.2 54.1 54.0 51.9 51.1 50.8 44.3 44.2 47.5 49.2 47.0 44.3 47.1 46.6

Canada 56.2 56.6 58.9 56.2 56.8 54.6 52.5 48.7 49.8 48.8 49.6 49.2 51.0 52.4 48.6 50.2 49.0 48.8

China 50.1 50.2 49.5 47.4 49.6 50.2 49.0 49.4 50.1 49.2 48.0 47.0 50.1 52.6 51.9 49.2 48.8 49.0

Eurozone 58.7 58.2 56.5 55.5 54.6 52.1 49.8 49.6 48.4 46.4 47.1 47.8 48.8 48.5 47.3 45.8 44.8 43.4

Germany 59.8 58.4 56.9 54.6 54.8 52.0 49.3 49.1 47.8 45.1 46.2 47.1 47.3 46.3 44.7 44.5 43.2 40.6

India 54.0 54.9 54.0 54.7 54.6 53.9 56.4 56.2 55.1 55.3 55.7 57.8 55.4 55.3 56.4 57.2 58.7 57.8

Japan 55.4 52.7 54.1 53.5 53.3 52.7 52.1 51.5 50.8 50.7 49.0 48.9 48.9 47.7 49.2 49.5 50.6 49.8

Russia 51.8 48.6 44.1 48.2 50.8 50.9 50.3 51.7 52.0 50.7 53.2 53.0 52.6 53.6 53.2 52.6 53.5 52.6

UK 57.3 58.0 55.2 55.8 54.6 52.8 52.1 47.3 48.4 46.2 46.5 45.3 47.0 49.3 47.9 47.8 47.1 46.5

USA 57.6 58.4 57.0 55.9 56.1 53.1 52.7 52.9 51.0 50.0 49.0 48.4 47.4 47.7 46.3 47.1 46.9 46.0

Source: Bloomberg

7 Special Report | Q2 2023 Macro Report | August 2023

ASSET CLASSES PERFORMANCES
Equities provide strong returns; bond performance moderates; gold declines

 In Q2 2023, the rally in global equities was primarily due to substantial returns in the US. Most large cap tech stocks rallied,
buoyed by the AI theme, which contributed to the considerable returns of the US and global indices.
Equity markets – Despite a good
 The banking turmoil, which started in March with the fall of Silicon Valley Bank, was controlled through government guarantees
start slow growth could weigh on
and liquidity support by the US Federal Reserve (Fed).
global equities in the second half of
 China’s recovery slowed, leading to sluggish Chinese equity performance. China, which forms the largest component of the
the year
MSCI Emerging Markets (EM) index, was also largely responsible for the EM equity underperformance.
 Equity valuations face the risk of further earnings downgrades as the economy slows.

 Bonds performance slowed compared to Q1 2023, as the widely expected moderation in Fed policy failed to materialized. This
factor has also postponed a bond rally further into the future.
Investment grade bonds poised for a  Bonds are well positioned with high yields providing good entry points limited downside. Additionally, the possibility of rate cuts
rebound, whereas high-yield bonds may help returns as yields decline. We expect IG bonds to provide investors attractive returns.
may face headwinds  Credit spreads are likely to widen in 2023 as recession/slowdown risk increases, with rating downgrades and debt defaults.
Additionally, high-yield bond spreads are below their average historical levels, which provides an unfavorable risk–reward and
may increase downside risk.

 The US dollar index rose in Q2 2023 owing to the continuation of the hawkish Fed monetary policy.
Currency markets – Dollar faces  The Euro and GBP strengthened against the USD as the ECB and Bank of England (BOE) were expected increase rates to
downside pressures and narrowing control high inflation. The inflation problem is especially pronounced in the UK as high inflation is worsening into a wage-price
rates differentials; will drive DM spiral, which may mean the BOE may have to make more rate hikes.
currencies to increase  Major EM currencies showed a mixed performance. The TRY weakened due to lack of investor confidence in the policies of the
re-elected Turkish President. The Russia–Ukraine war continues to weaken the Ruble.

 Crude oil prices fell in Q2 2023, as market participants grappled with concerns of oversupply, driven by expected low demand
due to the combined effect of a slowdown in western countries and a patchy recovery in China.
Commodities – Heavily influenced by  The global economy's slowdown in 2023 is expected to exert downward pressures on energy prices, resulting in reduced
global economic growth and demand.
geopolitical factors  Precious metals, such as gold and silver, declined as the Fed’s hawkish stance continued.
 Global demand slowdown is likely to impact base metal prices negatively in 2023, as reduced economic activity results in
reduced demand.

8 Special Report | Q2 2023 Macro Report | August 2023

ASSET CLASS RETURNS IN Q2 2023
Most asset classes generated positive returns in Q2 2023

8.7%

6.8%
6.2%

5.2%

2.3%
2.0%

0.9%
0.1%

-1.5%
-2.4% -2.5%

-6.1%

-7.6%

US Equity MSCI World Global Equity GCC Equity European Global High EM Equity Global Global Bonds Global Gold Oil Copper
Equity Yield Corporate Treasuries

Source: Bloomberg, Reuters

9 Special Report | Q2 2023 Macro Report | August 2023

EQUITY MARKETS
Global equity markets rose in Q2 2023

Global Equity Indices (Rebased)  2022 was a challenging year for global equities amidst geopolitical
tensions, high inflation, tightening monetary policy, and ultimately
116 earnings risks that look unavoidable as the economy slows.

114
 Following the sharp fall in global equity in 2022, equities recovered in
112 the first half of 2023. Developed market equities delivered 14% gains
110 H1 2023 and 6% in Q2 2023, amidst moderating inflation and peaking
interest rates, receding worries of further turmoil in banking sector,
108
and stronger than expected economic data releases.
106
 Emerging markets (EM) equities recorded a modest rise during the
104
first half of 2023, lagging those of developed markets. MSCI EM rose
102 4% in H1 2023 and delivered a negative performance in the Q2 2023.
EM underperformance was influenced by tension between the US and
100
China as well as worries over China's weak economic recovery. The
98 US debt ceiling uncertainty added to the negative mood, although this
96
was resolved in early June.

94
 GCC equities also recorded positive returns, due to rising crude oil
92 prices and as the US debt ceiling negotiations concluded in early
June.
90
Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23

ACWI EM WI EU GCC

Source: Reuters

10 Special Report | Q2 2023 Macro Report | August 2023

EQUITY MARKETS
DM equities recorded strong performance
S&P 500 DOW JONES NASDAQ
4,900 36,000 H1 2023 return of 3.8% 15,000
H1 2023 return of 15.9% H1 2023 return of 31.7%
4,700 35,000
14,000
34,000
4,500
13,000
33,000
4,300
32,000 12,000
4,100
31,000 11,000
3,900 30,000
10,000
3,700 29,000
3,500 28,000 9,000

Jun-22

Jun-23
Oct-22
Nov-22

Mar-23
Apr-23
Feb-23

May-23
Jul-22
Aug-22
Sep-22

Dec-22
Jan-23
Apr-23
Nov-22

Feb-23

May-23
Jun-22

Jun-23
Jul-22
Aug-22

Jan-23
Sep-22
Apr-23

Oct-22

Mar-23
Jun-22

Jun-23

Dec-22
Oct-22
Nov-22

Mar-23
Feb-23

May-23
Jul-22
Aug-22
Sep-22

Dec-22
Jan-23

EURO STOXX FTSE 100 CAC 40

H1 2023 return of 8.7% 8,200

H1 2023 return of 1.1% H1 2023 return of 14.3%
490 7,500
8,000
470
7,800
7,000
450
7,600
430 6,500
7,400
410
7,200
6,000
390
7,000

370 6,800 5,500

Apr-23
Feb-23
Jun-22

Jun-23
Oct-22
Nov-22

Mar-23

May-23
Jul-22
Aug-22
Sep-22

Dec-22
Jan-23

Jun-22

Jun-23
Oct-22
Nov-22

Mar-23
Apr-23
Feb-23

May-23
Jul-22
Aug-22
Sep-22

Dec-22
Jan-23
Apr-23
Feb-23

May-23
Jun-22

Jun-23
Oct-22
Nov-22

Mar-23
Jul-22
Aug-22
Sep-22

Dec-22
Jan-23

Source: Reuters
11 Special Report | Q2 2023 Macro Report | August 2023
EQUITY MARKETS
EM markets gave positive returns in H1 2023
SSE COMPOSITE INDEX HANG SENG NIFTY 50

3,500 H1 2023 return of 3.7% H1 2023 return of 4.4% 19,500 H1 2023 return of 6.0%
26,000
3,400 19,000
24,000
18,500
3,300 22,000 18,000
3,200 20,000 17,500
3,100 18,000 17,000

3,000 16,000 16,500

16,000
2,900 14,000
15,500
2,800 12,000
15,000

Jul-22
Aug-22
Sep-22

Jan-23
Feb-23

Apr-23
May-23
Jun-22

Nov-22
Dec-22

Jun-23
Oct-22

Mar-23
Apr-23
Nov-22

Feb-23

May-23
Jun-22

Jun-23
Jul-22
Aug-22

Jan-23
Sep-22
Oct-22

Mar-23
Dec-22

Apr-23
Feb-23

May-23
Jun-22

Aug-22

Jun-23
Oct-22

Mar-23
Nov-22
Jul-22

Dec-22
Jan-23
Sep-22
BRAZIL - IBOVESPA TAIWAN– TAIEX NIKKEI 225

125,000 19,000 H1 2023 return of 19.7% 34,400 H1 2023 return of 27.2%

H1 2023 return of 7.6%
120,000 18,000 33,400
32,400
115,000 17,000
31,400
110,000 16,000 30,400

105,000 15,000 29,400

28,400
100,000 14,000
27,400
95,000 13,000 26,400

90,000 12,000 25,400

Oct-22

Apr-23
Nov-22

Mar-23
Feb-23

May-23
Jun-22

Jun-23
Jul-22
Aug-22
Sep-22

Dec-22
Jan-23
Apr-23
Feb-23

May-23
Jun-22

Jun-23
Oct-22
Nov-22

Mar-23
Jul-22

Aug-22

Jan-23
Sep-22

Dec-22
Apr-23
Feb-23
Jun-22

Jun-23
Oct-22

Mar-23
Nov-22

May-23
Jul-22
Aug-22

Dec-22
Jan-23
Sep-22

Source: Reuters

12 Special Report | Q2 2023 Macro Report | August 2023

BOND MARKETS
Treasury yields rose in Q2 2023

10-year Treasury Yield vs Policy Rate 10-year European Bond Yields  US Treasury yields rose in Q2 2023, as resilient
economic activity, elevated inflation fueled
6.0
5.0 expectations of further rate hikes from the
central banks.
5.5
4.0
 In its June meeting, the Federal Open Market
5.0
Committee (FOMC) decided to keep interest
rates unchanged. This decision was a temporary
4.5
3.0 pause as investors expect the Fed to increase
4.0 rates at least once before stopping.

3.5 2.0
 The 10-year UST yield rose 38bps during the
quarter to 3.8% on June 30, 2023. The 10-year
3.0
and 2-year spread continued its inversion, 2-
1.0
year yield rose to 4.87% at the end of June
2.5
2023, 105bps higher than 10-year yield.
2.0
0.0
 European yields also rose as ECB and the Fed
1.5 policies diverged and the ECB hiked rates by
25bps to 3.5%. Yields demonstrated volatility,
1.0 -1.0
given the anticipation of a shift in interest rate
Jun-22

May-23
Jun-23
Jul-22

Sep-22

Dec-22

Jan-23
Oct-22

Apr-23
Aug-22

Nov-22

Feb-23

Mar-23

Jun-19

Jun-20

Jun-21

Jun-22

Jun-23
Oct-19

Oct-20

Oct-21

Oct-22
Feb-20

Feb-21

Feb-22

Feb-23
expectations from the ECB.

Germany UK Italy Spain

US 10-Year Yield US Fed Funds Target rate

Source: Bloomberg, Reuters

13 Special Report | Q2 2023 Macro Report | August 2023

BOND MARKETS
Corporate bond indices gave positive returns in Q2 2023

Global Corporate Bond Indices (Rebased)

107

 Corporate bond indices gave positive returns during the quarter and
106 the year. The Bloomberg Global Aggregate Corporate Bond Index
rose 0.1% during the quarter and 3.5% in H1 2023.

105
 High-yield bonds, as represented by the Bloomberg Global Aggregate
High-Yield Index, outperformed corporate bonds during the quarter
104
and year, with the index rising 2% QoQ and 5.2% in H1 2023.

103  Investment grade corporate bonds are well positioned to take

advantage of peaking and eventually, reducing rates. Additionally,
investors can currently benefit from the available high yields.
102

 High-yield bonds, however, may have an unfavorable risk–reward with

101
the possibility of spreads increasing significantly as the economy
slows and companies facing earnings downgrades.
100

99
Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23

Global Corporate Global High Yield

Source: Bloomberg, Reuters

14 Special Report | Q2 2023 Macro Report | August 2023

CURRENCIES
USD strengthened amid a hawkish Fed

DXY Index

116  After rapid appreciation in 2022, the US dollar remained relatively

flat in H1 2023. This stability came as markets started pricing in an
end to the Federal Reserve's hiking cycle, which had previously
114
contributed to the dollar's gains. Additionally, investors began to
expect that other G10 central banks had room to increase interest
112
rates. These expectations influenced market sentiment and
contributed to the US dollar's steadier performance during H1
110 2023.

108  The combination of strong GDP growth and a tight labor market
indicates that the US economy is effectively managing high
borrowing rates. This successful coping mechanism alleviates
106
concerns about an imminent recession and prevents the dollar
from weakening.
104

 Concerns over global recession and demand for safe-haven

102 assets may provide some support to the USD, marginally
offsetting the impending weakness in the currency.

100
Jun-22

Jun-23
Oct-22

Apr-23
Feb-23
Aug-22

Dec-22

Source: Bloomberg

15 Special Report | Q2 2023 Macro Report | August 2023

CURRENCIES
Euro, GBP appreciated in Q2 2023

Currencies Performance in Q2 2023

BRL 5.79%

 The EUR and GBP strengthen against USD in Q2 2023. The

GBP 3.01%
appreciation of the EUR was driven by market expectations of the
ECB continuing to implement rate hikes in July and beyond. The
GBP's appreciation was triggered by increased expectations of a
CAD 2.10% hawkish policy stance by the BOE.

EUR 0.20%
 The Japanese Yen (JPY) depreciated against the USD in Q2
2023. The weakening of the JPY could be attributed to the loose
monetary policy followed by the Bank of Japan (BOJ).
INR 0.08%

 The Turkish Lira (TRY) depreciated in Q2 2023, due to the

JPY -7.99%
inadequate monetary policy of the Turkish central bank to control
high inflation as well as its lack of independence.

RUB -10.30%  The Ruble (RUB) weakened amid political volatility, stalling
Russian exports followed by a rising fiscal deficit.
TRY -26.45%

Source: Bloomberg

16 Special Report | Q2 2023 Macro Report | August 2023

COMMODITIES – CRUDE OIL
Crude oil prices declined in Q2 2023 amidst slowing global economic activity

Oil Prices (USD per barrel)

120
 Brent and WTI Crude prices declined 6.1% and 6.9%,
Brent WTI Crude
respectively, in Q2 2023. The decline could be attributed to
oversupply concerns amidst a global economy slowdown and
110
continuing draw down from the Strategic Petroleum Reserve by
the US government.

100
 The hawkish monetary outlook by central banks raised concerns
about a potential recession, leading to worries about reduced oil
demand.
90

 A strong recovery in China was expected to offset the decline in

demand from western countries, thereby supporting prices.
80
However, the sluggish recovery reduced the probability of this
scenario, causing prices to dampen.

70
 Production cuts from OPEC+ helped in supporting oil prices.

60
Jan-23

Feb-23

Mar-23
Jun-22

May-23

Jun-23
Jul-22

Sep-22

Dec-22
Oct-22

Apr-23
Aug-22

Nov-22

Source: Bloomberg

17 Special Report | Q2 2023 Macro Report | August 2023

COMMODITIES – PRECIOUS METALS
Precious Metals declined in Q2 2023 due to a hawkish Fed

Gold and Silver (USD per ounce)

140

Gold (LHS) Silver (RHS)

 After a stellar run in Q1 2023, gold price declined 2.5% in Q2, falling
130 2.5%. The commodity’s performance could be attributed to the
expectations of a more hawkish monetary Fed policy as the Fed
continues increasing rates amidst a resilient US economy.
120
 The US 10-year TIPS yield rose from 1.2% in March to 1.6% in June,
contributing to the decline in gold price.
110

 Silver price declined 5.0% during the quarter, underperforming gold.

100  Concerns over global recession and demand for safe-haven assets
may provide upside to precious metal prices but hawkish central
banks and continued rate hikes are a major downside risks.
90

80
Feb-23
Jun-22

May-23

Jun-23
Jul-22

Sep-22

Dec-22

Jan-23
Oct-22

Apr-23
Aug-22

Nov-22

Mar-23

Source: Bloomberg

18 Special Report | Q2 2023 Macro Report | August 2023

COMMODITIES – BASE METALS
Negative performance in Q2 2023; dim prospects for 2023

Base Metal Prices

120

 Base metals prices decreased in Q2 2023 with zinc price declining

110 the most and copper price the least. Prices also reduced on H1
2023 basis with copper price declining the least and nickel price
declining the most.
100

 In Q2 2023, copper price dipped by 7.6%, followed by aluminum,

which fell 11.2%, followed by nickel, declining 13.9%. Zinc price
90 decreased the most by 19.2%

 Copper and aluminum prices are said to be the gauge of

80 economic activity and growth. However, as high interest rates take
effect and the global economy slows, demand for base metals
may decrease and prices may decline.
70

60
Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23

Copper Nickel Aluminum Zinc

Source: Bloomberg

19 Special Report | Q2 2023 Macro Report | August 2023

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