2Q 2023 Investor Presentation
MIS: Macroeconomic Assumptions
Underpinning our Full Year 2023 Outlook
Macroeconomic Assumptions¹
Real GDP2 U.S.: 0.5% -1.5%; Euro area: 0.0% 1.0%; Global 1.5% - 2.5%
Global benchmark rates to remain elevated, with U.S. Fed funds rate
above 5%, followed by the potential for rate reductions in early 2024; U.S.
high yield spreads to average ~500 bps, with periodic volatility
Global high yield default rate to rise to 4.5% - 5.0% by year-end
FX rates of $1.27 and $1.09 for GBP/USD and EUR/USD, respectively, for
the remainder of the year
Global inflation levels to continue to decline (U.S.: below 3% by year-end;
large Euro area economies: 3% - 5% by year-end, with considerable
variation among countries); U.S. unemployment rate to rise toward 4% by
year-end
Tailwinds
Rates nearing their peaks for most major central banks as inflation eases
~$4T of refinancing needs between 2023 and 2026
Dry powder at private equity firms
Headwinds
✗ Rising funding costs create refinancing risks for vulnerable issuers
✗ Recessionary concerns
✗ Geopolitical uncertainty, including the prolonged Russia-Ukraine military
conflict
Sources: Default rate and unemployment assumptions sourced from Moody's Investors Service "June 2023 Default Report", published July 18, 2023. High yield spreads, GDP and inflation assumptions as of July 25, 2023, from Moody's Investors Service.
Guidance as of August 3, 2023. Refer to Table 10 - "2023 Outlook" in the press release titled "Moody's Corporation Reports Results for Second Quarter 2023" from July 25, 2023, for a complete list of guidance, as well as assumptions used by the
Company with respect to its guidance.
1.
2.
GDP represents rate of change in real GDP.
Moody's | Decode risk. Unlock opportunity.
2Q 2023 Investor Presentation
10View entire presentation