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Invesco Solutions is proud to present our 2024 Capital Market Assumptions (CMAs). We hope the insights and data presented in this publication assist in your asset allocation process as you begin to rebalance portfolios in the coming months.
As 2023 comes to a close, we can use this time to reflect on what has been generally a positive year for capital markets and prepare for rebalances and possible changes to asset allocations. While welcome, the forecasted recession of 2023 never actually materialized despite the loud warnings from a variety of economists about the long and variable lags of policy tightening.
In recent client conversations we have repeatedly heard conflicting views from investment teams where half believes a soft landing is possible while the other side expects an abrupt end to the business cycle. We sympathize that it is incredibly difficult to predict which of these two opposing scenarios will play out. To avoid having our strategic views skewed because of the latest narrative, our team at Invesco Solutions utilizes a robust process for constructing forward looking estimates of a full business cycle and market performance.
Source: Invesco Solutions, estimates as of Sept. 30, 2023. Proxies listed in Figure 8. These estimates are forward-looking, are not guarantees, and they involve risks, uncertainties, and assumptions. Please see page 10 for information about our CMA methodology. These estimates reflect the views of Invesco Solutions, the views of other investment teams at Invesco may differ from those presented here.
2024 Investment Outlook
We expect inflation to moderate and central banks to pause tightening in the first half of 2023, which should help take the global economy from the current contraction to a recovery regime and set the stage for the next market cycle.
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As 2023 comes to a close, we can use this time to reflect on what has been generally a positive year for capital markets and prepare for rebalances and possible changes to asset allocations. While welcome, the forecasted recession of 2023 never actually materialized despite the loud warnings from a variety of economists about the long and variable lags of policy tightening. The third quarter inspired flashbacks of 2022 when both equities and fixed income sold off as interest rates rose. However, October and November have provided a sigh of relief as a collection of encouraging economic surprises has investors questioning if this accelerated tightening cycle could actually lead to a soft landing. Recent data has shown that inflation is being tamed globally, the US consumer remains strong, there are signs of slack in what has been a tight labor market, and central banks have begun signaling that they are close to done hiking, all together reducing the probability of a deep recession in the near future.
Source: Invesco Solutions, as of September 30, 2023. Proxies listed in Figure 8. These estimates are forward-looking, are not guarantees, and they involve risks, uncertainties, and assumptions. Please see page 11 for information about our CMA methodology. These estimates reflect the views of Invesco Solutions; the views of other investment teams at Invesco may differ from those presented here. The 60/40 Portfolio is a blend of 60% S&P 500 Index and 40% Bloomberg Barclays US Aggregate Index.
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Source: Invesco, estimates as of September 30, 2023. Proxies listed in Figure 8. These estimates are forward-looking, are not guarantees, and they involve risks, uncertainties, and assumptions. Please see page 11 for information about our CMA methodology. These estimates reflect the views of Invesco Solutions; the views of other investment teams at Invesco may differ from those presented here. Performance, whether actual or simulated, does not guarantee future results.
This is a quarterly update of Invesco’s capital market assumptions (CMAs) providing the latest long-term estimates for the behavior of over 170 major asset classes in 20 different currencies, including 8 private asset classes.
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