Until bond yields peak, REITs may remain under pressure. Commodities’ strong performance may be sustained. While the less bearish economic outlook suggests infrastructure exposure is less crucial, inflation mitigation is still required.
Alternatives provide important diversification against traditional equities and fixed income.
A nuanced approach is required in fixed income. Higher for longer may extend the bond sell-off, but a modest economic downturn means credit spreads can remain fairly tight. Bonds now generate meaningful portfolio income.
The global bond sell-off is disruptive but adds much-needed income to fixed income.
Spiking bond yields are challenging the equity market’s soft landing assumption. With limited prospect of an upgrade to earnings expectations, equity market returns are likely to be muted—particularly until bond yields peak.
Equities face limited upside as a 2024 soft landing is already priced in.
Although U.S. growth has remained strong, leading indicators continue to signal recession. Tighter lending standards, as a result of the recent banking crisis, only increase the risk of a hard landing.
Global growth is facing a number of headwinds.
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4Q 2023
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