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Germany (Deutschland), Institutional
Changechevron_rightThe views expressed are those of the authors at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
This is an excerpt from our 2024 Investment Outlook, in which specialists from across our investment platform share insights on the economic and market forces that we expect to influence portfolios in 2024. This is a chapter in the Global Economic Outlook section.
The nature of economic cycles is changing. We expect domestic output gaps to be far more important in determining inflation in a particular economy than we have seen over the past 20 years of globalisation. Markets and central banks will take time to adjust to this new normal, but the result will be shorter and more frequent cycles, accompanied by more volatile and, on average, higher inflation.
With monetary policy in flux and governments consistently increasing their spending commitments, we expect risk premia to experience a further upward trend in the coming years, driven by a significantly higher shift in the net supply of government debt, which is fast approaching levels not seen for three decades.
Governments are consolidating their deficits slowly while central banks, which acted as the buyers of last resort over the last 10 years, have become net sellers. At the same time, global savings surpluses have shifted towards emerging markets, which seem to be less inclined to recycle the money into developed market government debt.
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Global high-yield outlook: Near term, defensive but longer term, solid
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Credit: Better opportunities to add risk on the horizon
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