Investment Outlook for 2024

Explore the outlook

Our outlook for the new year is “2024”: 2% growth, 0 recessions, 2% inflation and 4% unemployment. A soft landing remains in reach, particularly as disinflation looks set to continue and the Federal Reserve now appears satisfied with its progress.

Global economic growth should be less divergent next year, but central banks more so given different journeys in the inflation battle. This should drive the U.S. dollar lower.

Given the Fed is done with the current tightening cycle, we believe long rates peaked in October and have scope to decline further as both growth and inflation cool to trend. Moreover, interest rates should broadly stabilize and the curve should gradually steepen over the course of 2024 as markets anticipate rate cuts beginning over the next 6-12 months.

After a strong 2023, investors should temper expectations for 2024 as earnings estimates look lofty, volatility has been unusually low, valuations could come under pressure and economic growth is likely to slow.

International equities should continue exhibiting solid and diversified returns next year driven by still favorable valuations, positive earnings growth and improving return of capital to shareholders.

Although the dust is still settling on valuations, alternative investments can support the outcomes investors seek in portfolios, like diversification, inflation hedging and alpha.

Against a challenging backdrop of turning tides, investors would do well to diversify and lean on active management, stepping out of cash and into risk assets to take advantage of the anticipated changes ahead.