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U.S. Retirement Market Outlook
Three themes shaping the U.S. retirement landscape.
2023 Defined Contribution Consultant Research Study
Our third annual study captures retirement views from the defined contribution consulting and advisory community.
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Global Market Outlook
Tectonic shifts create new opportunities.
Artificial intelligence: The new electricity
AI has the potential to be the biggest productivity enhancer to the global economy since the rise of electricity.
Insights
Global Market Outlook
Tectonic shifts create new opportunities.
2023 Defined Contribution Consultant Research Study
Our third annual study captures retirement views from the defined contribution consulting and advisory community.
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Qualified plan limits
In October 2023, the Internal Revenue Service released the 2024 dollar limits on certain benefits and contributions to retirement plans and IRAs.
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2024 Global
Market Outlook
Tectonic shifts create
new opportunities
The economic distortions of the past few years have produced major changes to the global investment landscape. We are in a new regime of higher interest rates and stickier inflation. Investors will need to adapt to this new normal but could find opportunities by staying agile and taking a broad view. Read our 2024 Global Market Outlook for timely insights on navigating this transformed world.
Three themes for a world transformed
Navigating macroeconomic fog
Global economies have stayed resilient amid uncertainty, but headwinds are likely to mount in 2024.
Rethinking fixed income
We think the Fed is likely to remain on hold in 2024. High yield and shorter-term investment-grade corporate bonds could offer opportunities.
Broadening equity horizons
Equity investors may benefit from casting wider nets in 2024. We see opportunities in Japan, emerging markets, health care, and artificial intelligence (AI).
Tactical allocation views
The tactical allocation views are prepared by the T. Rowe Price Multi-Asset Division and informed by a subjective assessment of the relative attractiveness of asset classes and subclasses over a 6- to 18-month horizon.
Asset Classes
Stocks
Valuations are broadly neutral with pockets of opportunity. We expect earnings to remain resilient in the near term, but global growth remains uncertain due to lagged effects of tighter monetary policy.
Bonds
Yield levels are attractive relative to recent history. However, increased supply and sticky inflation could be headwinds, particularly for longer-term bonds. Credit fundamentals remain supportive.
Cash
With many central banks on hold, cash and cash equivalents provides liquidity and continues to offer relatively attractive yields. However, the trajectory of easing could drive yields lower in the back half of the year.
Equity Regions
U.S.
Despite a resilient economy, the outlook remains clouded by Fed uncertainty, manufacturing sector weakness, and narrow market breadth. Elevated valuations make large‑cap U.S. equities unappealing given this backdrop.
Global Ex-U.S.
Valuations are attractive on a relative basis, but the growth outlook remains challenged for some major economies, particularly Europe and China. Lower rates could support more rate-sensitive economies.
Emerging Markets
Valuations and currencies are attractive. Monetary easing could support growth. Chinese equities reflect headwinds amid housing sector concerns, but other regions should benefit from rebounding exports.
Style and Market Capitalization
U.S. Growth vs. Value*
Moderating growth could be a headwind for cyclical sectors. Momentum surrounding AI and weight‑loss drugs should provide structural tailwinds for growth, but valuations are challenging.
Global Ex-U.S. Growth vs. Value*
Value stocks are attractively priced, and commodities and financials could benefit from stickier inflation. Growth stocks are relatively expensive and could suffer from weakening demand in China.
U.S. Small vs. Large-Cap*
Small‑caps are attractive as valuations already price in a significant economic downturn. However, elevated leverage, narrow margins, and near-term refinancing needs mean that higher rates remain a risk.
Global Ex-U.S. Small vs. Large-Cap*
Small-cap valuations are relatively attractive. Signs of growth stabilization and easing central bank policies could be catalysts for reentry.
Inflation Sensitive
Real Assets Equities
Commodity-related equities are cheap and offer a hedge against potentially stickier inflation and energy price shocks. Oil prices may be set for structural increases due to peaking productivity.
* For pairwise decisions in style and market capitalization, boxes represent positioning in the first 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 and market capitalization asset classes are represented as pairwise decisions as part of our tactical asset allocation framework.
This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action. Information and opinions, including forward‑looking statements, are derived from proprietary and nonproprietary sources deemed to be reliable but are not guaranteed as to accuracy.
U.S. Investment Grade (IG)
Yields are broadly attractive. We favor core and shorter duration as long-term bonds could remain vulnerable to inflation and heavy new supply. Credit fundamentals remain supportive.
Developed Ex-U.S. IG (Hedged)
Global central banks appear to be near peak tightening as inflation shows signs of slowing. Yields look attractive on a USD‑hedged basis
U.S. Treasury Long
Longer‑term yields likely are near a peak but remain vulnerable to increased supply and sticky inflation. Treasuries should offer ballast to risk assets as correlations are expected to decline.
Inflation Linked
Break‑even yields reflect a continued deceleration in inflation. Signs of inflation reaccelerating could present a reentry point.
Global High Yield
Attractive yields should provide a cushion if spreads widen. Credit fundamentals remain strong, and while default rates could rise, we do not expect them to exceed their historical averages.
Floating Rate Loans
Valuations and yields remain attractive. But the rate resetting feature and lower duration profile of loans become less attractive as we near peak rates.
Emerging Market (EM) Dollar Sovereigns
Yields are still attractive, and moderating inflation and peaks in central bank tightening cycles both should be supportive. A weaker U.S. dollar should be positive for EM economies.
EM Local Currency
EM local bonds and EM currencies are both attractively valued. Expectations for central bank easing, lower inflation, and a potential upside for growth should support the sector.
The asset classes across the equity and fixed income markets shown are represented in our multi-asset portfolios. Certain style and market capitalization asset classes are represented as pairwise decisions as part of our tactical asset allocation framework.
This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action. Information and opinions, including forward looking statements, are derived from proprietary and non-proprietary sources deemed to be reliable but are not guaranteed as to accuracy.
Important Information
This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.
The views contained herein are those of the authors as of June 2023 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.
This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types, advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.
T. Rowe Price cautions that economic estimates and forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual outcomes could differ materially from those anticipated in estimates and forward-looking statements, and future results could differ materially from historical performance. The information presented herein is shown for illustrative, informational purposes only. Forecasts are based on subjective estimates about market environments that may never occur. The historical data used as a basis for this analysis are based on information gathered by T. Rowe Price and from third-party sources and have not been independently verified. Forward-looking statements speak only as of the date they are made, and T. Rowe Price assumes no duty to and does not undertake to update forward-looking statements.
Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy.
Investment Risks:
Fixed-income securities are subject to credit risk, liquidity risk, call risk, and interest-rate risk. As interest rates rise, bond prices generally fall. Investments in high-yield bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities. Because of the nature of private credit there may be heightened risks for investors, such as liquidity risk and credit risk to the underlying borrower and investments involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities. International investments can be riskier than U.S. investments due to the adverse effects of currency exchange rates, differences in market structure and liquidity, as well as specific country, regional, and economic developments. These risks are generally greater for investments in emerging markets. Small-cap stocks have generally been more volatile in price than large-cap stocks. Mid-caps generally have been more volatile than stocks of large, well-established companies. Investing in technology stocks entails specific risks, including the potential for wide variations in performance and usually wide price swings, up and down. Technology companies can be affected by, among other things, intense competition, government regulation, earnings disappointments, dependency on patent protection and rapid obsolescence of products and services due to technological innovations or changing consumer preferences. Health sciences firms are often dependent on government funding and regulation and are vulnerable to product liability lawsuits and competition from low‑cost generic product. Commodities are subject to increased risks such as higher price volatility, geopolitical and other risks. There is no assurance that any investment objective will be achieved. Alternative investments typically involve a high degree of risk, may be illiquid, may undertake more use of leverage and derivatives, and are not suitable for all investors. Diversification cannot assure a profit or protect against loss in a declining market.
Past performance is not a reliable indicator of future performance. All investments are subject to market risk, including the possible loss of principal. Actual future outcomes may differ materially from any estimates and forward-looking statements made. All charts and tables are shown for illustrative purposes only.
T. Rowe Price Investment Services, Inc.
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