AFMC - 2024 Midpoint: Shifting Sands

2024-06-30 08:10:00 ET

Summary

• Central banks fueled the market rally earlier this year as they embraced optimism that inflation could decelerate without sacrificing growth.
• The Fed's decision to hold off on rate cuts is supported by resilient economic growth keeping inflation above the 2% target.
• The still robust macro backdrop should provide an almost perfect set-up for a risk-on environment.

By Seema Shah, Chief Global Strategist

Despite reduced Fed rate cut expectations for this year, the outlook for risk assets remains positive. The same economic strength that is delaying rate cuts should drive robust earnings growth, securing a still solid backdrop for equities, while macro resilience should ensure fixed income credit spreads do not widen meaningfully from their historically tight levels. Provided the economic backdrop remains robust, investors do not need to fear a delayed and modest rate cutting cycle....

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