Our strongest convictions

our strongest convictions

#1

Positive growth dynamics but with disparities across regions

Global economic activity is expected to remain on a favourable trend overall in 2024, with the dynamics of the various regions continuing to vary. In the US, the economy is likely to slow, but remain more robust than in the other main developed economies. In Europe, growth could remain more fragile overall, but would gradually benefit from lower inflation and an easing of monetary policy. Activity in China is likely to continue to be held back by difficulties in the real estate sector.

#2

Central banks: moderate rate cuts in prospect

Inflation has reached levels close to 2.5-3% year-on-year in the US and the euro area, compared with peaks of at least 9%. Against this backdrop, central banks are likely to begin a rate cut cycle this year. They may, however, remain cautious and cut rates only gradually, particularly in view of persistent tensions on the labour market, which would slow inflation's return to the 2% target.

#3

Overweight equity markets, particularly in the US and Europe

Equity markets will continue to benefit from the same support factors as at the end of 2023: prospects for lower key interest rates and inflation against a backdrop of resilience in the global economy and corporate earnings. We prefer European markets, which are attractive in terms of valuation, and US markets, whose economy continues to outperform. We are also maintaining our underexposure to emerging equity markets, mainly due to the continuing difficulties of the Chinese economy.

our strongest convictions

#5

Maintaining neutrality on the dollar

Changes in monetary policy have been the main driver of currency trends in 2023 and are likely to remain so in 2024. We anticipate near-synchronised rate cuts by the major central banks. Therefore, we are maintaining our neutral stance on most currencies.

#6

Continued under-exposure to gold

Despite a strong period for gold, partly due to the fall in the dollar and interest rates, we are maintaining our underweight position on the metal, which appears less attractive in the context of high interest rates.

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#4

We remain constructive on government bonds and IG corporate bonds

Bonds continue to offer attractive carry, particularly those issued by governments and highly-rated companies. Bonds also offer attractive diversification in the event of a shift towards a recession scenario, involving a potentially sharp fall in interest rates and a return to negative correlation between bond and equity market performance.