This year, markets have been ruled by hot inflation, with investors flocking to stocks that benefit from rising prices. “The surge in inflation has been a dominant—if not the dominant—financial market theme of 2022,” said Wells Fargo in a note, noting that global consumer inflation accelerated to multi-decade highs. Will that theme continue to dominate in 2023, or will other developments take its place? These are the mega themes to come, according to analysts. Disinflation Prices are starting to peak and 2023 will be the year of disinflation, according to various investment banks. “Globally, we see inflation peaking in 4Q this year, with disinflation driving the narrative next year,” said Morgan Stanley in its 2023 Global Economics Outlook report. Oil prices will stabilize and global food supply will improve — easing the inflationary shocks of 2022, the bank predicted. Wells Fargo expects global consumer price index inflation to “slow meaningfully” to 5.2% in 2023 from a projected 7.2% this year. But Europe, including the UK, could be the exception — the bank expects that the effects of rapid inflation and rising rates there will “linger for some time.” These are the stocks that could benefit from falling inflation. Fat break, weaker dollar Financial conditions could ease in 2023, said Morgan Stanley and other bank analysts. It expects four out of 11 central banks to stop tightening monetary policy by the fourth quarter of this year, and the rest in the first quarter of 2023. “We see the pause in the rate hiking cycle, coupled with an easing in US rates and peaking of the USD, leading to easier financial conditions in 2023,” the investment bank wrote. A stop to rate hikes in the United States and a peak in inflation may cause the US dollar, which has been surging all year, to pull back, analysts said. The dollar index — which gauges the currency against its major peers — is up around 8.5% year to date. “An end to US rate hikes and an end to US economic growth are factors that should bring the greenback’s renewed gains to an end by early next year,” Wells Fargo said. But it added that the dollar could gain another 3.5% over the next three to four months. It predicted that an “extended period” of US dollar depreciation will follow, with the greenback possibly falling 12.5% — the same magnitude it gained this year — from the first quarter of 2023 until end-2024. Here’s how to trade a peak in the dollar. China’s comeback Chinese stocks have been through two “painful” years of a bear market, with the MSCI China index plunging 63% in the 20 months through October, Citi noted. But 2023 could mark its revival, the bank said, echoing Wall Street’s optimism that China’s easing of Covid measures is set to put its stocks back on the road to recovery. “We believe a decisive turn in China policy is underway and will support an economic revival,” Citi analysts wrote. But Citi cautioned that the reopening “won’t happen overnight.” “In our view, the recovery is still ahead, and equity markets will likely see improvements over the course of 2023.” BofA predicted a “sharp rebound” for China in the second half of 2023 — when it expects the country to reopen fully. To play that theme, buy stocks that can benefit from a reopening in China, according to Goldman and others. — CNBC’s Michael Bloom contributed to this report.