Economy

We expect the US economy to slow and potentially downshift into a recession sometime in 2024, as tighter monetary policy weighs on consumers and businesses. In addition, (geo)political tensions may increase market volatility. The risk/return for US equities is unfavorable. We recommend that our clients reduce portfolio beta and increase allocations to defensives and quality growth.

Our Portfolio Allocation Summary for December 2023.

We enter 2024 as we were across the last four months of 2023, tactically equal weight across the board until the S&P 500 rally is complete and we gain a better entry point for underweighting equities and overweighting fixed income.

The recent uptick in European economic data will not last beyond the next six months. How will European corporate credit perform in this context?

Treasury yields will sketch out a range between now and Q1 2024, with the upside determined by inflation and the downside determined by labor markets.