So what we do here is boil it down to just 11 slides. There are over 60 pages in the guide but that is far too many for any conversation about the markets. However, it's important to do this concisely. The Guide to the Markets, now in its 20th year, is constructed to try to address these kinds of questions. Fixed income offers strong asymmetric returns and investors can look outside of public markets to alternatives to help fine tune portfolios for the desired outcomes in alpha, diversification and income.Ģ024 could be another year of surprises but leaning into active management and stepping out of cash should help investors take advantage of the changing investment climate.
However, valuations outside of the largest stocks look attractive. The same cannot be said for bond markets, however, which grappled with elevated interest rate volatility and supply imbalances.Īs investors look forward into 2024, geopolitical uncertainty remains elevated. Despite Fed tightening, equity markets saw impressive gains last year, with relatively low volatility. Ultimately, this will depend on whether or not the U.S. That being said, the Fed is still firmly pushing back against the notion of any early rate cuts, raising the risk that rates will stay higher for longer. At its December meeting, the Fed kept rates unchanged, and forward guidance indicated that rates are at their peak. Meanwhile, after hiking rates by a cumulative 5.25% over the past two years, the last of the Fed's rate hikes is likely behind us. However, with fading tailwinds from the consumer and business spending, slow momentum does leave the economy vulnerable to any kind of a shock. Looking ahead, the economy should slow in 2024 but a soft landing still looks possible. Growth accelerated to 5.2% during the third quarter, while inflation has continued to slide down towards the Fed's 2% target. Instead, 2023 turned out to be a year of surprising resilience. At the start of last year, many investors and economists worried that 2023 would be a challenging year for the economy markets. Welcome to the economic and market update for the first quarter of 2024.
Morgan Asset Management, and I head the team that produces the Guide to the Markets.