Our Asset Allocation Chart Pack has been updated with the latest data and our analysis of recent developments.
Most 'risky' assets fared well this month, with resilient economic activity helping to boost appetite for risk. But most 'safe assets' notched up losses, with sovereign bonds selling off as investors pared back their expectations for central bank rate cuts. We expect safe assets to rally a bit over the next couple of years, largely informed by our belief that investors are underestimating how quickly and/or how far many central banks will cut interest rates. Our expectation that safe asset yields will fall, alongside our view that global growth will pick up, informs our forecasts for strong returns from risky assets over 2024-25. We expect equity returns to be particularly strong as an AI bubble continues to inflate.
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