Capital Markets Outlook  |  Q4 2023

Asset allocations: Reduce exposure to risky assets

  Current quarter
  Previous quarter
    Change from previous quarter
Underweight Neutral Overweight
Equity
U.S. large cap
U.S. small cap
U.S. value
U.S. growth
Europe
Japan
Emerging markets
Fixed income
Interest-rate sensitive
U.S. government
Non-U.S. developed country
Emerging markets
Corporate credit
Investment grade / High yield / Floating rate
Securitized
Residential mortgage credit
Commercial mortgage credit
Prepayment risk
Commodities
Cash

Currency views

U.S. dollar versus
Favor other Neutral Favor dollar
  Euro
  Pound
  Yen

Remain underweight to equity risk

Stocks remain unattractive as monetary policy has recently become the most restrictive since mid-2007.


Government bonds offer more attractive yields

With government bond yields now close to the return potential of stocks, duration may be an attractive strategy to hedge against an economic slowdown.


Neutral on commodities

Recent increases in oil prices do not change the overall outlook.