Our Asset Allocation Chart Pack has been updated with the latest data and our analysis of recent developments.
Although we’re growing less convinced by the idea that the US economy will tip into recession over the coming quarters, we still expect disappointing growth across advanced economies to weigh on risk appetite over the rest of this year. We think that may pile pressure on ‘risky’ assets and boost to ‘safe’ ones.
We think central banks will generally cut interest rates by more than is discounted over the next year or so. That may help to drive decent returns from sovereign bonds. But we think credit will notch up slightly negative returns over the rest of 2023 as rising spreads outweigh falling ‘risk-free’ yields. We also expect equities to come under some pressure over the rest of 2023. That said, we think they will rebound significantly over 2024 and 2025 as AI enthusiasm fuels a stock market bubble.
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