2024 Global outlook – Q2 update

Market Outlook - Upbeat market sentiment is expected to continue, with inflation perceived to be slowing and growth holding steady[18] - The risk of resurgent inflation could eventually impact market sentiment negatively[18] Macro Risk Management - Sticky inflation and higher interest rates are key factors in managing macro risks, necessitating a dynamic portfolio approach[15] - Market pricing of future Fed policy rates indicates expectations for rate cuts, but deeper cuts may not materialize in the long term[23] Economic Growth Trends - U.S. economic activity remains below pre-COVID trend growth rates, indicating a lower growth trajectory[29] - Japan's economic recovery is characterized by rising wages and mild inflation, supporting a cautious policy pivot from the Bank of Japan[35] Investment Strategies - Overweight positions in U.S. and Japanese equities are favored due to strong earnings growth and supportive monetary policies[42][67] - Preference for short-term bonds is advised due to uncertain inflation and market volatility, while long-term U.S. Treasuries are viewed neutrally[43][48] Sector Insights - The technology sector's growth, particularly in AI, is expected to drive above-benchmark returns in U.S. equities[59] - Private credit is seen as a potential growth area as banks retreat from lending, offering attractive returns relative to credit risk[46]