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Global Asset Allocation Viewpoints

Our experts share perspective on market themes and regional trends, plus insights into current portfolio positioning.

Market Perspective

As of 30 April 2024

  • Global growth outlook remains positive against a backdrop of gradually easing inflationary pressures across most economies.
  • U.S. growth continues to be resilient, buoyed by a strong consumer, while optimism around European growth is building. Japanese growth remains challenged, and in China, there are signs that policy support is helping stabilize the economy, although risks remain.
  • U.S. Fed is still looking towards rate cuts this year, but sticky inflation and resiliency in the economy have tempered expectations. Meanwhile, the European Central Bank (ECB) appears closer to easing given progress with inflation. After hiking in March, the Bank of Japan (BoJ) continues to assess further hikes.
  • Key risks to global markets include a retrenchment in growth, stubborn inflation, volatility surrounding central banks’ policy divergence, geopolitical tensions, and trajectory of Chinese growth.

Portfolio Positioning

As of 30 April 2024

  • We remain modestly overweight equities, supported by resilient economic growth, positive earnings trends, and areas with more reasonable valuations.
  • We remain modestly overweight cash relative to bonds. Cash continues to provide attractive yields with Fed rate cuts pushed further out and the yield curve remaining inverted.
  • Within fixed income, we added to U.S. dollar hedged developed market bonds outside of the U.S. given a higher likelihood of interest rate cuts outside the U.S. and an attractive hedged yield for U.S. based investors.
  • Additionally, across fixed income, we remain overweight high yield and emerging markets bonds on still attractive absolute yield levels and reasonably supportive fundamentals.

Market Themes

As of 30 April 2024

Green Shoots?

Economic growth in Europe is showing signs of life after several years of teetering near recessionary levels, with better-than-expected first quarter GDP growth, largely driven by a services-led revival. Muted foreign demand especially from China, fears around a natural gas shortage and decades-high inflation had all weighed on European sentiment in recent years. But the tide appears to be turning on the back of a milder-than-expected winter and falling inflation, increasing the odds for an upcoming rate cut by the ECB in June. This has given way to an uptick in consumer spending and provided a boost to Europe’s tourism and hospitality sectors—notably coming from countries like Spain, Portugal, and Greece. However, it’s Europe’s manufacturing powerhouse, Germany, that continues to struggle given its dependence on exports to China and consequences of having relied on Russian energy, with no quick fix on the horizon. But for now, positive sentiment on the heels of better-than-expected growth, lower inflation, and hopes for near-term rate cuts may draw investors’ attention, but questions remain whether these green shoots will lead to a broader and more sustainable recovery.

Eurozone: All About Services as Manufacturing Lags

As of 30 April 2024

Chart as discussed above

Source: Bloomberg Finance L.P.

The Almighty Dollar

Despite multiple calls for the end of the U.S. dollar’s dominance over recent years, it remains near all-time highs and has strengthened against every major currency in the world so far this year. Its most recent push higher has stemmed from resilient growth in the U.S. sustained in part by elevated fiscal spending along with sticky inflation, causing a shift to less aggressive Fed rate cut expectations. Meanwhile, many other countries have seen a faster decline in inflation, which has put downward pressure on their currencies versus the dollar on expectations their central banks move sooner on rate cuts. The strong dollar has many countries seeing their currencies falling to multi-decade relative lows, with talk of intervention, like in the case of Japan struggling with a slumping Yen. While a weaker currency has aided many of these countries’ exporters, it comes with other consequences including capital competition versus higher yielding markets such as the U.S., import inflation and raising dollar-denominated borrowing costs for countries that are funding in U.S. dollars. With the Fed expected to move slower on rate cuts, U.S. growth remaining resilient, a packed election calendar and still unsettled geopolitical environment, it’s hard to see what breaks the buck, before it may break something else.

U.S. Dollar: Holding Its Strength1

As of 30 April 2024

Chart as discussed above

1 Data is represented by the U.S. Dollar Index (DXY).

Regional Backdrop

As of 30 April 2024

  Views Positives Negatives
United States N
  • Earnings expectations are increasing
  • Consumer spending remains strong
  • Labor market has been very resilient
  • Progress on inflation has stalled
  • Stock valuations have become challenging
  • Lagged effects of monetary policy remain a risk
  • Political uncertainty heightened
Canada N
  • Bank of Canada expected to cut rates soon
  • Commodity price strength could boost earnings
  • Economic growth has slowed significantly
  • Consumer savings balances have faded
  • Elevated interest rates remain a drag on spending
Europe U
  • Inflation has been steadily declining
  • European Central Bank expected to cut rates soon
  • Economic is gradually improving
  • Inflation is moderating
  • Monetary policy is restrictive
  • Economic growth remains weak
  • Geopolitical uncertainty is heightened
United Kingdom N
  • Inflation has been steadily declining
  • Bank of England likely to cut this year
  • Labor market has been resilient
  • Fiscal consolidation may need to be accelerated
  • Tight labor markets could keep wage inflation elevated
Japan O
  • Economy welcomes inflation after decades fighting deflation
  • Corporate governance continues to gradually improve
  • BoJ remains more accommodative
  • Yen weakness is a tailwind for export businesses
  • Expectations are high, raising the bar for upside surprises
  • Yen weakness and rising inflation could raise pressure on the BoJ to hike
Australia U
  • Fiscal stimulus is supporting the economy
  • Commodity price strength could boost earnings
  • Reserve Bank of Australia remains hawkish
  • Equity market valuations are rich
  • Consumer spending is weakening
Emerging Markets O
  • Equity valuations are attractive relative to the U.S.
  • Chinese economy incrementally improving
  • Investment flows are positive
  • Regulatory concerns are easing
  • Chinese property deleveraging continues to weigh on activity
  • Chinese consumer and business confidence fragile
  • Meaningful fiscal stimulus measures appear unlikely

O = Overweight
N = Neutral
U = Underweight

Views are informed by the Asset Allocation Committee and Regional Investment Committees (United Kingdom, Europe, Australia, Japan and Asia) and reflect the equity market.

Asset Allocation Committee Positioning

As of 30 April 2024

Asset Allocation Committee Positioning table

1 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.

Portfolio Implementation

As of 30 April 2024

Tactical Allocation Weights: Equity
Tactical Allocation Weights: Fixed Income

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 2024 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.

Additional Disclosures:

Certain numbers in this report may not equal stated totals due to rounding.
Source: Unless otherwise stated, all market data are sourced from FactSet. Financial data and analytics provider FactSet. Copyright 2024 FactSet. All Rights Reserved.

Key risks –The following risks are materially relevant to the information highlighted in this material:
Even if the asset allocation is exposed to different asset classes in order to diversify the risks, a part of these assets is exposed to specific key risks.
Equity risk – in general, equities involve higher risks than bonds or money market instruments.
ESG and Sustainability risk – May result in a material negative impact on the value of an investment and performance of the portfolio.
Credit risk – a bond or money market security could lose value if the issuer’s financial health deteriorates.
Currency risk – changes in currency exchange rates could reduce investment gains or increase investment losses.
Default risk – the issuers of certain bonds could become unable to make payments on their bonds.
Emerging markets risk – emerging markets are less established than developed markets and, therefore, involve higher risks.
Foreign investing risk – investing in foreign countries other than the country of domicile can be riskier due to the adverse effects of currency exchange rates; differences in market structure and liquidity, as well as specific country, regional, and economic developments.
Interest rate risk – when interest rates rise, bond values generally fall. This risk is generally greater the longer the maturity of a bond investment and the higher its credit quality.
Real estate investments risk – real estate and related investments can be hurt by any factor that makes an area or individual property less valuable.
Small- and mid-cap risk – stocks of small and mid-size companies can be more volatile than stocks of larger companies.
Style risk – different investment styles typically go in and out of favour depending on market conditions and investor sentiment.


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