Bonds and emerging markets stand out in the Santa rally

Friday 05 January 2024

Global Investment Views, Equity, Fixed income

   

Bonds and emerging markets stand out in the Santa rally

January 2024 | The rapid retreat in fixed income yields caused by falling inflation and dovish central banks has affected valuations, but bonds are still a good diversifier as we enter a slowdown. However, we may see some uptick in yields (owing to inflation). The recent equities rally is largely based on easing financial conditions and expectations of a soft or no landing next year. There is a disconnect between valuations in some segments and their earnings potential, which raises risks of deratings.

01 |  Inflation is declining, but it's too soon to declare victory; US core inflation is displaying stickiness.

02 | US and Europe are weakening; Labor markets are loosening, and consumers' views of worsening job security adds to our forecasts of a mild US recession in H1.

03 | Currently, markets are ignoring the long-term US debt sustainability issues and are driven by the Fed policy outlook.

Bonds and emerging markets stand out in the Santa rally

Important Information

Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of January 1, 2024 . Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the [author] and not necessarily Amundi Asset Management and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product or service. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not indicative of future results. Amundi US is the US business of Amundi Asset Management.

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