November 2023

Global Asset Allocation Viewpoints

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Welcome to our latest Asset Allocation Viewpoints - your monthly source for actionable insights on portfolio positioning from our Asset Allocation Committee and Multi-Asset team. 

Market Perspective

As of October 31, 2023

  • Global central banks’ emphasis moving towards growth stabilization with increasing evidence that both growth and inflation trending lower.
  • European and UK economic growth nearing recession levels, putting central banks on hold, while the U.S. economy remains resilient, supported by a strong consumer. China seeks to stabilize weakening growth through increased policy support.
  • While global central bank tightening has likely peaked, the U.S. Fed’s pledge for “higher for longer” rates has had worldwide impact on raising longer-term yields that could create vulnerabilities.
  • Key risks to global markets include impacts of the sharp move higher in rates, a deeper than expected decline in growth, central bank missteps, reacceleration in inflation, trajectory of Chinese growth, and geopolitical tensions.

Portfolio Positioning

As of October 31, 2023

  • We closed our underweight to equities and are now neutral, taking advantage of recent declines amid the rise in yields. Declining inflation trend amid still stable growth supportive for end of Fed tightening cycle, while equity valuations beyond narrow leadership attractive. We remain overweight areas of the market with supportive valuations, such as small-caps and emerging markets.
  • As a hedge against inflation remaining above central bank targets, we hold a modest overweight to real assets-related equities.
  • Within fixed income, we remain modestly overweight cash relative to bonds. Cash has provided attractive yields and liquidity to take advantage of recent market dislocations.
  • Within fixed income higher-yielding sectors, we remain overweight high yield, floating rate loans, and emerging market bonds on still attractive absolute yield levels and reasonably supportive fundamentals.

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Market Themes

As of October 31, 2023


Earlier this year positive economic data was welcomed as it meant that the U.S. economy could possibly be skirting past an inevitable hard landing. Now similar good news is seemingly too hot for the markets, raising concerns that the Fed may keep their foot on the brakes for longer. Surprisingly strong third quarter growth of over 5%, a still tight labor market, and unrelenting U.S. consumer spending are all helping fuel the Fed’s “higher for longer” narrative. In reaction, bond yields have spiked to decade-high levels, tightening financial conditions and in a way helping advance the Fed’s cause. Since the end of July, equity markets have declined over 10%, largely driven by the sharp rise in yields and anticipated impacts should they stay at these levels for longer. For now, too hot data seems unwelcome, and too cold is likely to reignite fears of a hard landing. A good balance of declining inflation and not collapsing growth data ahead may prove just right for investors’ appetites.

Equities Feeling Sharp Rise in U.S. 10 Year Treasuries

As of 31 October 2023

Graph 1

Past performance is not a reliable indicator of future performance.
Source: Bloomberg L.P. Please see Additional Disclosures for more information about this sourcing information.

Collateral Damage

While the U.S. economy continues to show resilience in the face of higher interest rates, growth across many parts of the world is showing signs of weakness. Europe looks to have slipped into recession, the UK is not far behind and Chinese growth has disappointed. The emphasis on fighting inflation is steadily being replaced by the need to stabilize declining growth, at least outside the U.S. Unfortunately, for the rest-of-the-world, the U.S. Fed’s policy has far reaching impacts as seen by the recent spike in longer-term yields globally. With many regions seeing weakening growth, higher yields may not be a welcome sign as global central banks are starting to downshift interest rate policies. The move higher in yields has also sent the U.S. dollar even higher, proving especially painful for many emerging markets economies, their currencies and dollar-denominated bond markets. Should the rest of the world continue to slow while the Fed keeps rates elevated, more collateral damage may be instore for vulnerable economies needing to stabilize growth, defend currencies and compete for capital flows.

Divergence in Purchasing Managers Indices as Global Growth Slows

As of 31 October 2023

Graph 2

Past performance is not a reliable indicator of future performance.
Each country/region is represented by their respective S&P Global Composite Purchasing Managers Indices: U.S.: S&P Global Composite United States; China: S&P Global Composite China; Euro Area: S&P Global Composite Euro Area; UK: S&P Global Composite United Kingdom.

Regional Backdrop

As of October 31, 2023

Regional Backdrop

Click each region below for more details

  • Consumer spending remains strong
  • Labor market has been resilient
  • Fiscal spending has supported capex
  • Earnings expectations are increasing


  • Monetary policy remains very tight
  • Banking sector concerns will impact credit availability
  • Interest rates are expected to remain elevated


  • Monetary tightening is close to a peak
  • Commodity prices may rebound due to supply constraints
  • Labor market has been resilient


  • Inflation remains stubbornly high
  • Consumer savings balances are fading sharply
  • Consumer leverage is elevated

  • Inflation cooling faster than expected
  • European Central Bank may be finished hiking
  • Labor market has been resilient


  • Inflation remains elevated, particularly core inflation
  • Economic growth is slowing
  • Monetary policy is restrictive


  • Still high inflation has begun to moderate
  • Bank of England may be finished hiking
  • Labor market remains strong


  • The BoE may be forced to keep rates elevated
  • Fiscal consolidation may need to be accelerated
  • Tight labor markets could keep wage inflation elevated


  • Economy benefitting from uptick in inflation
  • Corporate governance continues to gradually improve
  • Equity valuations remain attractive


  • Yen weakness has weighed on equity market returns
  • Earnings expectations may need to be revised lower

  • Positive demographics trends may help curb inflation
  • Household savings balances remain elevated
  • Commodities may rebound due to supply constraints


  • Household disposable income has fallen to recessionary levels
  • Corporate earnings expectations remain bearish


  • Monetary tightening in most emerging markets has peaked
  • Equity valuations are attractive relative to the U.S.
  • Further Chinese stimulus is expected


  • Global trade could suffer with tighter monetary conditions
  • Geopolitical risks remain elevated
  • Chinese consumer and business confidence fragile

Asset Allocation Positioning

As of October 31, 2023

These views are informed by a subjective assessment of the relative attractiveness of asset classes and subclasses over a 6- to 18-month horizon.

Positioning Key

Asset Classes

Following recent sell-off valuations have become more reasonable amid slow global growth and higher rates. However, resilient labor markets, rising earnings estimates, overly negative sentiment, and supportive fiscal policies provide reasons for optimism.

Yields look attractive across fixed income and credit sectors continue to offer broadly supportive fundamentals. However, rates remain susceptible to upward pressure on lingering inflation and better-than-expected growth.

Cash continues to offer attractive yields, a shorter duration profile as rates are pressured higher, and provides liquidity should market opportunities arise.



Earnings expectations appear to be improving and economic activity remains resilient, with technology innovation a key differentiator. However, rising rates are pressuring companies with high interest expense and looming refinancing needs.

Valuations are attractive on a relative basis and local currencies have room to appreciate. However, the macroeconomic backdrop remains concerning amid weak growth in Europe, a stumbling recovery in China and still tight global monetary policy.

Valuations and currencies are attractive and central bank tightening has peaked. Chinese equities reflect headwinds amid housing sector concerns, although incremental stimulus measures are forthcoming.

Style & Market Capitalization

A tilt towards higher quality businesses is warranted given lingering economic concerns and rising rates. Momentum surrounding AI and weight loss drugs could provide a structural tailwind to growth, although valuations are extended.

Value stocks offer attractive valuations. Cyclical and geopolitical risks remain a concern, but higher oil prices could offer a tailwind.

Small-caps offer attractive relative valuations but face margin concerns due to higher exposure to interest rates and higher input costs. Given heightened economic uncertainty, higher-quality bias is warranted.

Caution is warranted due to a potential flight to quality that could favor large-caps. However, small-caps offer reasonable valuations against a slowing growth backdrop.


Commodity-related equities are cheap and offer an attractive hedge to potentially stickier inflation and energy price shocks. Additionally, oil prices may be set for structural increases due to peaking productivity.


Sector offers reasonable yield levels and higher-quality profile helps as a potential hedge in risk-off environment, although vulnerable to higher interest rates on resilient economic data, persistent inflation, and notable U.S. Treasury supply.

Global central banks nearing peak tightening as inflation shows signs of slowing, however, yields could remain higher for longer. Yields look attractive on a USD hedged basis.

Stronger-than-expected growth, persistent inflation, and supply demand dynamics continuing to pressure long end rates higher. While sector traditionally offers ballast amid a decelerating macro backdrop, that scenario appears to be pushed out. Should still serve as a hedge in a sharp risk-off environment.

Although inflation is showing signs of slowing and lower inflation is already priced into breakeven levels, risks of inflation reaccelerating still remain.

Credit fundamentals and higher yields remain supportive. Spread levels are less compelling, but default rates are likely to increase but are not expected to spike beyond long-term averages.

Valuations and yields remain attractive. Loans’ rate resetting feature and lower duration profile attractive should rates continue to drift higher.

Yields still attractive, while peaking central bank tightening cycles and moderating inflation supportive. China reopening enthusiasm has faded, but modest policy support expected.

EM local valuations fair relative to other sectors. Sector could get a boost from central banks starting to cut rates, however, impact limited until developed market central banks hawkish tone shifts.

*For pairwise decisions in style & market capitalization, positioning within boxes represent positioning in the first mentioned asset class relative to the second asset class.

The asset classes across the equity and fixed income markets shown are represented in our Multi-Asset portfolios. Certain style & market capitalization asset classes are represented as pairwise decisions as part of our tactical asset allocation framework.

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Portfolio Implementation

As of October 31, 2023


Tactical Allocation Weights


Fixed Income

Tactical Allocation Weights


1 U.S. small-cap includes both small- and mid-cap allocations.

Source: T. Rowe Price. Unless otherwise stated, all market data are sourced from FactSet. Copyright 2023 FactSet. All Rights Reserved.

These are subject to change without further notice. Figures may not total due to rounding.

Neutral equity portfolio weights representative of a U.S.-biased portfolio with a 70% U.S. and 30% international allocation; includes allocation to real assets equities. Core fixed income allocation representative of U.S.-biased portfolio with 55% allocation to U.S. investment grade. The S&P Index is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”) and has been licensed for use by T. Rowe Price. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). This product is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P Index.

Important Information

Any specific securities identified and described are for informational purposes only and do not represent recommendations.

This material is being furnished for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, and prospective investors are recommended to seek independent legal, financial, and tax advice before making any investment decision. T. Rowe Price group of companies, including T. Rowe Price Associates, Inc., and/or its affiliates, receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation, or a solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

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