Market Outlook

The recent move higher in rates presents an attractive entry point for ratcheting up fixed income allocations, even as spreads have tightened.

When it comes to rate cuts, the trend matters more than the “when,” and current market dynamics point to a continued environment of solid growth and cooling inflation.

In an uneven macro environment, we emphasize balance in our multi-asset portfolios, favoring U.S. large cap equities and high-quality fixed income.

Our long-term return expectations for capital markets serve as key inputs into our strategic asset allocation process for multi-asset portfolios and provide context for shorter-term forecasting.

Capital markets have responded positively to better-than-expected economic outcomes so far this year. While the United States has managed to avoid an official recession, growth is almost certain to slow and increases in profits will be challenged. Given this backdrop, we see equities trading sideways to slightly higher in the near term and we continue to favor the U.S. over the rest of the world.

An unexpected shock in the banking sector has stress-tested the economy and policymakers. Both initially passed. But the impact on lending and credit conditions remains unclear and increases the likelihood of a mistake by the Fed going forward.

Weak global growth for the year ahead appears almost certain. The outlook for capital markets is anything but.

The outlook for stocks and bonds given the expected paths of economic growth and interest rates.