Prepare for continued volatility in 2024, says State Street Global Advisors

investmentnews.com:

A new year tends to bring a wave of optimism, but when it comes to the markets and the economy this should not be overstated according to State Street Global Advisors.

In its 2024 Global Market Outlook, the asset manager sees continued uncertainty and volatility which will require smart thinking and portfolio management from investors and their advisors.

A global recession – and certainly in some key markets such as the U.S. – should be avoided but as tighter monetary policy works its way through the system there could be headwinds. And even without the dreaded R word, growth is set to be subdued.

“With escalating geopolitical tensions, major elections, and monetary policy reaching a critical juncture, the year ahead will be challenging for investors,” said Lori Heinel, global chief investment officer. “2024 will require agility to respond to market signals and multiple factors within the macroeconomic environment. While pockets of opportunity can be found in equities, we consider that fixed income offers better opportunity given current rates and our expected path of growth and future rates.”

The U.S. is likely headed for a soft landing, but the economy will be fragile in 2024. Here more than globally, State Street’s experts believe rates will be cut sooner than expected. But there is always the chance that the Fed and others will stay hawkish.

“Over the past year, global economies have exhibited surprising resilience in the face of the sharpest tightening cycle experienced in decades, with the US economy showing impressive strength. While many regions could be set to benefit from a soft landing, it will depend heavily on central banks’ policies,” said Michael Arone, Chief Investment Strategist for the US SPDR Business.