The constructive backdrop of solid growth, positive earnings and prospective rate cuts has been fueling market optimism. This mix should also support a broadening of the market rally as rate cuts come closer into sight.
Equities should continue embracing the soft landing narrative.
The Fed wants to cut policy rates, but it may be fazed by recent inflation surprises. It will likely cut policy rates two times this year, starting in September. Other central banks will also begin easing soon but will cut with greater urgency.
Central banks believe they can cut rates without sacrificing inflation.
After having made significant progress last year, inflation deceleration has flattened out. The last mile of disinflation toward central bank targets will require some economic slowdown and job market rebalancing.
Global disinflation is showing signs of stalling.
U.S. growth is downshifting somewhat as lower income households pull back, and corporates face higher refinancing costs. However, with most other global economies still struggling, the U.S. will remain the strongest global performer.
The U.S. economy stands out from the crowd.
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Key themes
2Q 2024
Global Market Perspectives
Explore the key themes impacting markets and portfolios in the quarter ahead.
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Further concerns, or crisis
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Global Market Perspectives
Explore the key themes impacting markets and portfolios in the quarter ahead.
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U.S. Treasury yields should skew lower as the Fed cuts but will be limited by the shallow easing cycle. Credit spreads are tight but, providing recession is avoided, should not widen significantly and provide important carry opportunities.
Fixed income yields are attractive compared to equity yields.
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Assets in money market funds have ballooned to a record $6 trillion, with investors attracted by elevated yields. Now, this cash represents a potential tailwind to risk assets.
With potential gains across asset classes, staying in cash is the main risk.
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U.S. Treasury yields should skew lower as the Fed cuts but will be limited by the shallow easing cycle. Credit spreads are
tight but, providing recession is avoided, should not widen significantly and provide important carry opportunities.
Fixed income yields are attractive compared to equity yields.
05
Assets in money market funds have ballooned to a record $6 trillion, with investors attracted by elevated yields. Now, this cash represents a potential tailwind to risk assets.
With potential gains across asset classes, staying in cash is the main risk.
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