Welcome to the 2024 fall edition of Perspectives

Our core economic views are little changed since the summer edition of Perspectives. We remain broadly constructive on the outlook for the global economy. The US economy continues to set the pace amongst the major economies and consumer spending sustained domestic economic activity above trend. A benign slowing in US growth remains likely in coming quarters, and a relatively soft landing appears in reach for the US Federal Reserve. Inflation in the US, and elsewhere, continues to moderate and looks to be a weaker constraint on central bank policy decisions than it was at the beginning of 2024. With most major central banks now cutting interest rates, fiscal policy becoming more supportive of economic activity, and investment spending likely to become a tailwind we continue to expect a gradual recovery in global gross domestic product (GDP) growth.

We also expect constructive economic conditions to foster a (cautiously) positive environment for risk-taking and investment performance over the next 12 months. Fundamental factors such as economic growth and inflation, interest rates, corporate profitability and technological innovation are the key drivers of longerterm investment performance. Within this outlook, we think equities and bonds can both make a positive contribution to investment performance. We currently see little reason to favour one asset class over the other relative to strategic allocation weights.

Also consistent with last quarter’s edition, political risk remains the key challenge to this cautiously constructive outlook. Geopolitical risks increased over the last three months and November’s US presidential election is now top-of-mind for investors. Both are contributing factors to more volatility in markets—consistent with history. In particular, rising uncertainty associated with possible election-driven policy changes often encourages investors to try and time market participation. Frequently, this has proven to be the wrong decision. Staying invested in a well-diversified portfolio through short-term volatility—regardless of the source—has typically paid off.

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